5 Things To Do In A Crypto Bear Market

We all know that it’s difficult to make money in the crypto market these days because the crypto industry is so politicized.

According to the Indian Express, on 18 May 2022, the stablecoin TerraUSD, together with its sister currency Luna, fell by 99%. The news shook the whole cryptocurrency market. Investors are dumbfounded because Terra and Luna are no longer valuable. As a result, for stablecoins these days, modest drops can grow into major concerns.

However, every problem has a solution. To be even more hopeful, every problem offers multiple potential answers!

Do we have a bear market? Let’s look at what a bear market is and how it affects you when you take some concrete steps in this article. You can profit financially from this volatile yet competent crypto bear market opportunity.

What is a Bear Market?

A bear market happens when a market’s prices fall by more than 20%. It frequently coincides with poor investor sentiment and diminishing economic prospects.

We understand that a bear market occurs when stock values fall, encouraging sales. At the same time, one can never be certain of crypto’s bearish trends. Even when you’re told to look at analytics, fundamentals, and charts like the Cup and Handle pattern or the Death Cross. But, regardless of what they say, Bitcoin, the world’s first decentralized cryptocurrency, is exactly where it should be.

With a double-digit percentage loss, the crypto market lately left many investors concerned, particularly when Bitcoin fell below US$20,000.

5 Strategies to Follow in a Crypto Bear Market

The bear market trading tactics can provide you with a better understanding of what to expect during a bear market. You will also be prepared for a market downturn.

• Buy the dip using Dollar Cost Averaging (DCA).
• Short selling when the price of a certain cryptocurrency falls
• Spend time researching.
• Don’t Worry About Selling
• Diversify your investments by investing in a variety of crypto assets.

1. Use Dollar-Cost Averaging (DCA)

“Dollar-cost averaging” was one of the most successful investment techniques throughout the bear market (DCA). It entails dividing your reserve cash into smaller amounts and trading with them in the future.

Assume you have $2,000 in your savings account. It would be ideal if you could divide this reserve sum into five tranches of $400 or ten tranches of $200. You can trade with these lower quantities while being secure!

It’s difficult to anticipate when a digital asset will hit its lowest point before reversing. As a result, we advise you to conserve money by not spending it all at once. It is advantageous to purchase a small amount and examine the asset. If you win it, go for a bit more and keep moving on. 

You’ve probably heard the adage “don’t put all your eggs in one basket.” It’s the same issue with all of your investments.

2. Short selling when the price of a certain cryptocurrency falls

Short selling is a sophisticated financial strategy reserved for experienced investors exclusively. Short selling is the practice of selling an asset at a high price with the purpose of repurchasing it at a lower price later. This short-term selling allows crypto traders to make large returns in the long run as the value of their sold assets falls. Even newcomers to cryptocurrency trading will find it easier to repurchase currencies.

Crypto traders, like all other traders, want to buy an asset at a low cost and sell it at a higher price. However, with crypto short-selling strategies, the exact opposite is true. Shorting allows you to profit even when the market is down.

What occurs is that you must borrow a specific cryptocurrency at the current market price and promptly sell it. You have now earned the high value. When prices fall, you repurchase the currency at the newly reduced market rates.

Return to your broker the borrowed price. You now have a profit equal to the difference between the previous  (your selling price) and new market values (your buying price).

Here is an example:

Here’s an example. Assume you’ve decided to sell 5 Bitcoins. Let assume that the current market price of BTC is US$ 60,000. It will have a net worth of $300,000. At the current market pricing, you will borrow 5 Bitcoins from your broker. Later, if the market behaves predictably and the price of a single BTC falls to $50,000, the value will be US$ 250,000.

So you’ll buy at the current price and pay the broker back. You make $50,000 since the former market price (US$ 300,000) less the current market price (US$ 250,000) = $50,000.

3. Spend time researching.

When considering how to buy in a bear market, we normally focus on price declines. It’s a common tendency of investors to be concerned about the volatility of bearish trends. You should research throughout this time. Invest your time in studying about any cryptocurrency or a variety of cryptocurrencies. The results will wow you!

If you want to start with a crypto section, that’s ok. Or if you can look for more investment abilities in the future to manage your digital assets risk-free.

Still unsure what to do in a bear market? Before entering the crypto bear market, conduct extensive study on how to make money in a bear market.

You can also learn about crypto investments as a source of passive income. Even if prices fall, you may be confident that your crypto assets will generate yearly returns of more than 5%. If you have a portion of your cryptocurrency reserved, it contributes to network security and consistent return payments.

Only logical and extensive study can get you to the finish line in cryptocurrency trading. Remember that sites driven by self-interest or esoteric sites will simply lead you astray and frustrate you. As a result, you should do your own research (DYOR).

As an investor, you must be informed on crypto market movements and trends. You should also be proficient enough to meet any future obstacles in the crypto marketplace. Always rely on reliable sources and keep a close eye on the market. It is the greatest strategy to protect your cryptocurrency money.

4. Don’t Worry About Selling

Managing your emotions during bear market executions is difficult. According to experts, it is the most difficult aspect of moving forward with professional trading. Individuals who are unable to control their emotions will not gain from their investments.

When faced with a significant price drop, you naturally desire to minimize your losses. However, doing so will not result in a profit in the long run. You should take a deep breath and remember why you invested in cryptocurrency in the first place. You are undoubtedly looking forward to bettering your life by earning more and conserving more.

Profits can be significantly increased by foresight and efficient planning. Profitability is also a difficult skill to perfect. Greed can impact you, and your expectations may increase to new heights. It raises your trade risk, especially if you don’t place stop losses.

Analyze why prices have dropped, go deeper into the causes, and devise your own answers. Consider whether your previous conclusions are still relevant to the new market requirements. Rethink your strategy for a big game.

5. Diversify your investments by investing in a variety of crypto assets.

There are already over 17,000 cryptocurrencies available on the market. Nobody can forecast which cryptocurrency will recover first or rank highest. It is also difficult to predict how long the crypto bear market will endure.

DCA can be used for a variety of crypto assets. You may need to limit your trade sizes, which will lower your overall risk for your organization. It is not advised that you choose a cryptocurrency and invest in it. You’ll have ample time to figure out which one works best for you.

Seek out the following:

1. The All-Time High Aspect
   There is no guarantee that any cryptocurrency will ever recover to its all-time high. It can, nevertheless, provide insight into an asset’s potential.
2. The Performance
   Examine the price history of the asset. You can utilize tools like TradingView to determine how well it rebounded at important periods. Is it in sync with other currencies in the market, or does it outperform other assets on its own? The currency’s past success is not a guarantee of a bright future; however, you get a good notion of the present market facts
3. Emerging Roadmap
   To recover an assert intelligently, a significant update or roadmap execution is required. Rebranding, a new partnership, and the launch of a mainnet are among the planned roadmap announcements.

In Conclusion

In this article, we explored what to expect in the 2022 crypto bear market. To avoid animosity, use these helpful tactics. Take profits, maintain some funds on hand in case of a crash, and remain cool through difficult times.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Patrick

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