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5 Tips To Survive Crypto Bear Market

By Tokenize Xchange
April 14, 2022

Bitcoin has dropped by as much as 40% from its all-time high in 2021, so it’s reasonable that many people are concerned about a long-term bear market. It’s unclear whether bitcoin will recover quickly or whether the current circumstances will lead to a long-term slump. In any case, to be prepared for a bad market is important to all investors. Keep scrolling to learn 5 tips to help you survive the crypto bear market with Tokenize.  

survive crypto bear market
To be prepared for a bad market is important to all investors

What is the bear market?

Bull and Bear is a general term that represents the trend of many financial markets including the crypto market.

The bull market represents a positive growth trend in the market, both in terms of price and volume. The term is derived from the way a bull attacks a rival. It will use its horns to butt it in the same way that investors use their money to drive the bull market. On Wall Street, you might see a statue of a bull, symbolizing investor confidence in the market’s bullish future.

survive crypto bear market in 5 tips
A bear market is a term for a downtrend of the market

In contrast, a bear market is a term for a downtrend of the market, usually used when the market drops over 20%. The image of the bear was used because of the way bears hunt in the wild, using their paws to pounce on their prey to the ground. In Frankfurt, you will see a statue of a bull and a bear fighting each other, symbolizing the brainstorming battle between two groups of bullish and bearish investors.

What’s the best strategy for a bitcoin bear market?

Many people predicted that bitcoin will fall below $1,000 in 2017, yet this never happened. Investors learned that attempting to time the market and predict bitcoin’s price movements would only result in them owning less bitcoin and having greater regrets.

So, what is the greatest bitcoin trading technique to help you survive the bear market?

1. DCA strategy 

DCA strategy is a method in which an investor invests a large sum of money in modest increments over time rather than all at once. The idea is to profit from market downturns without putting too much money at risk at any given time.

DCA strategy
DCA strategy is a method in which an investor invests a large sum of money in modest increments over time rather than all at once.

>>>Read more: Beginner guide: Understand DCA Strategy in Crypto Trading

DCA is intended to help counteract the negative impact of short-term market volatility on an investment. If the price of an asset falls during the time you are dollar-cost averaging, you will profit if the price rises again. DCA can save you the time and effort of trying to time the market to get the best stock prices if you’re not a professional market watcher. It’s a method for investing slowly and regularly, with the goal of avoiding the human need to obtain everything at once.

2. Beware of short-term Bitcoin pumping

The next guide to help you survive the crypto bear market is to watch out for Bitcoin pumping in short term. 

crypto downtrend
The next guide to help you survive the crypto bear market is to watch out for Bitcoin pumping in short term. 

Investors who base their investment on bitcoin inflating may be setting themselves up for a major letdown. During the downtrend, the crypto prices might go up Keep in mind that pricing can change at any time. If investors need to pay for immediate personal expenses, they should not store all of their money in bitcoin.

3. Don’t try to short the market

While some investors may be tempted to short Bitcoin and other cryptocurrencies (bet on the price dropping), experts advise against it. A method like this could cause more harm than good.

“The moment to short is likely over, and it would be an emotional decision based on the assumption that the market is ‘heading to zero,'” said Scott Melker, a crypto miner and investor who broadcasts the Wolf of All Streets podcast on Spotify and is the creator of The Wolf Den newsletter. “Buying now has an exponential upside, while shorting has a very limited upside.”

4. Buy the dips

Buying the dip is a simple strategy that involves just accumulating bitcoin at a lower price or discount than its all-time high price level. Investors are then urged to let go of their assets by selling them at a higher target price and profiting from the difference.

Most price shocks occur when the news media exaggerates the negative consequences of new regulations or sensationalizes to stir and arouse the emotions of readers, so buying the dip is most typically used after unfavorable news. This is a good way to get quick capital gains on your assets, especially if they aren’t generating any interest if you keep them. Trading aggressively in a volatile market permits one to profit from it as long as they do not sell at a loss.

5. Consider staking

In a bad market, investors may be concerned about the value of their assets falling, so they look for strategies to protect their portfolios. “Staking” is a strategy to boost your security and profit during a long-term hold in the crypto world.

By staking your assets, investors can guarantee their cryptocurrencies to a crypto protocol to earn rewards in exchange. Crypto staking allows investors to contribute to the network security by locking up their tokens, hence, users are rewarded for protecting the network in the form of native tokens.

tips to survive crypto bear market
By staking your assets, investors can guarantee their cryptocurrencies to a crypto protocol to earn rewards in exchange.

The more cryptos you stake, the higher the rewards you receive. Since your crypto rewards would be automatically distributed on-chain, you will get an amount of passive income while you sleep

Also, for investors who have zero experience and knowledge in cryptocurrency trading, staking is a safe option to help you avoid investment risks. Once you stake, you would receive a persistent guaranteed reward and be able to get back the initial amount of staked cryptos in due time. After the due date, investors can continue staking their crypto or trade them.

For investors who have zero experience and knowledge in cryptocurrency trading, staking is a safe option to help you avoid investment risks in a downtrend. 

>>>Read more: Crypto staking: What to notice

In other words, staking gives investors the chance to earn a safe and predictable passive income during a bear market. 

Bottom line

In conclusion, a crypto bear market is never nice for any investor — seeing everything become red and frustrated? You’re not on your own. Many people desire their cryptocurrency portfolio would soar to the moon, but the harsh reality is that there is no such thing as the right time to invest. While market sentiments are beyond our control, there are some tactics that investors may employ to weather the storm and thrive in a crypto bear market.

We’ve learned two important lessons from previous bear markets. To begin with, bitcoin always recovers and emerges stronger than it was previously. Second, perseverance and a long-term perspective pay off. Follow Tokenize Blog for more investment lessons!

Disclaimer

Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk.