A bear market is a challenging phase for every investor, especially if you’re new to the crypto space. The sharp decline in cryptocurrency prices can lead even the most seasoned investors to panic and sell their assets at a loss. However, as we know from past market cycles, this is not the end of the road. Once these markets recover and begin to trend upward again, those who held on will be in an excellent position to make a tidy profit. Here are some tips that will help you survive in this crypto bear market.
Diversify your portfolio
One of the most important things you can do to protect your assets during a bear market is to diversify your portfolio. There are two main types of risk when investing: market risk and company risk. Market risk refers to the fact that there is an inherent volatility in almost any investment, as well as the fact that any investment can drop in value. The best way to mitigate this type of risk is to diversify your investment portfolio. Diversification allows you to reduce your exposure to market risk by investing in a variety of different assets. By spreading your money across different types of assets, you can reduce your risk of losing money by any significant amount because if one investment falls, the others might rise and help make up the difference. You might be wondering: which assets should you invest in? The answer is simple: just about anything.
Define your buying criteria
In order to make sensible investing decisions, you must first understand what you are investing in and why. Before you jump into a coin, make sure you understand everything about it, including its business model, current market conditions, token distribution, team members, and their progress towards their roadmap. You should also set a strict buying criteria to avoid emotional buying, which is a big mistake that many investors make at the wrong time. Your buying criteria should be based on the fundamentals of the coin, not its current market price.
Use stop-loss limits
Stop-loss orders are a very useful tool that allows you to sell your assets at a particular price, regardless of whether or not the price has increased or decreased since your purchase. This is important, since there is no guarantee that your assets will increase in value. If you bought a cryptocurrency and its price suddenly dropped, a stop-loss would automatically sell your coin at the price at which you purchased it, thus preventing you from holding on to a decreasing asset. The idea is that you set your stop-loss at a level that is just below the price at which you bought the coin. This way, if the price goes down, you still make a small profit. If it goes up, you don’t lose anything.
Be careful with margin trading
Margin trading is a risky business and should only be attempted by experienced traders who fully understand how it works. Even then, you should still only invest what you can afford to lose. Margin trading allows you to borrow money from your broker in order to amplify your gains and losses, but it can also lead to larger losses if the market conditions get unfavorable. During a bear market, there is always a chance that your broker might get shut down, leading to a big loss on your part. Therefore, you should only use margin trading when you are sure of a significant upward movement in the market. Otherwise, it is simply too risky.
Don’t forget about the fundamentals
A lot of people are paying more attention to the daily fluctuations of the market than the development goals of their favorite coins. While it is true that the overall trend of the market is down, some coins are doing much better than others, and some are even breaking records in terms of price increases. There are also coins that are getting more attention than usual as people look for more affordable options, and there are some coins that may be undervalued and poised for a significant price increase.
Only trade what you can afford to lose
Remember: whatever amount of money you decide to invest in the market is money that you might not ever see again. Therefore, only invest an amount that you can afford to lose. There is a high chance that you will see your investment go down in value, and some market cycles are longer than others. Now, during a bear market, it is even more important that you set a strict amount that you are willing to lose. If you are new to crypto, it is likely that you do not yet fully understand the market, so it is even more important that you set a strict amount that you are willing to lose.
Watch the News, But Don’t Overreact to It
The news is a driving force behind the market’s decision to rise or fall, so it is important to keep an eye on the headlines. However, it is equally important to avoid overreacting to the news. It is easy to get caught up in the drama and headlines of the day, but if you are not careful, you could end up selling at a less than optimal time. Instead, take a step back and look at the bigger picture. What is the overall sentiment in the market? What do the charts say? What do the fundamentals say? Once you have all of this information, it is much easier to make a smart decision on when to buy or sell your assets.
Don’t be Afraid to Step Away from the Screen
As we mentioned before, it is very easy to get swept up in the day-to-day fluctuations of the market. However, it is also important that you don’t let yourself get too wrapped up in the daily news and happenings of the market. It is easy to get stressed out when you are watching the ticker of your favorite coin go up and down every five minutes. Therefore, it is a good idea to step away from the screen once in a while and take a break. You can also try to trade less frequently. Only trade when you have a good reason to do so. If you are trading because you are bored or anxious, it’s a sign that you need to take a break. You also don’t want to go into debt due to frequent trading. Instead, you should save your trading for when you have a solid reason to do so.
Stay up to date with market developments
No one knows exactly when the bear market will end. However, if you stay up to date with the latest market developments, you have a better chance of getting out before it’s too late. Stay updated on the latest news, both in the crypto and traditional financial sector. Stay up to date with the regulatory environment in which crypto operates. When the ICOs are getting more attention, it is a signal that the market is about to shift. If a major partnership is formed, it may signal a trend change. Stay updated with the latest developments and you can better decide when to invest and when to get out.
Be Patient and Wait for Good Opportunities
During a bear market, it is easy to get frustrated and jump into the market at sub-optimal times. However, it is important that you remain patient and wait for good opportunities. The best times to buy cryptocurrencies are generally when there is blood in the streets. When everyone is panicking and selling their assets at a loss, you can swoop in and buy them at a cheaper price. However, do not forget that these assets have immense potential, and they will recover from the current situation. Once they do, you will be in a great position to make a tidy profit. If you follow all of these tips, you will be well equipped to survive and thrive during a bear market. Bear markets are challenging, but they are also a great time to buy low and wait for a significant upward movement in the market.
