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What should you do if the crypto market is down? 6 ways to Survive in the Bear season
Ever wonder what you should do when cryptocurrencies’ prices start to fall? You might fidget, or join the crowd who think it is the end for crypto. These massive price drops are not a new phenomenon. They happen in all financial markets. This is often a time when the market begins to relax after a prolonged period of uptrending.
We’ll quickly explain the causes of these huge downturns, also known as bear markets, and how you can survive them.
What Is a Bear Crypto Market?
A bear market in crypto markets refers to a market sell-off that is characterised by a substantial price drop for a long time. This is when supply exceeds demand and leads to lower prices and low investor confidence.
Bears are investors who have a pessimistic outlook and anticipate that the market will continue to fall. The bear market is difficult for novice traders, especially if they have little or no experience.
Bear markets are not just in crypto, but also in traditional markets such as stocks, bonds, forex, stocks, and real estate. Bear markets in crypto tend to be more volatile than traditional markets. This could be due to the fact that crypto markets are still newer and less established than traditional markets.
Causes and Characteristics of a Crypto Bear Market
Bear markets can last for years or just a few days. Investors lose faith in assets due to various factors and begin selling their holdings. Investors will withdraw more from their investments as the asset’s price drops.
It is unclear what causes a crypto bearish market. However, it has been triggered by factors like low trading volume, negative sentiments, regulatory restrictions, and government sanctions.
Bear crypto markets are often characterised by negative opinions about crypto on social media and higher supply than demand. Traditional finance is also distrusted. Investors lose confidence in crypto, which leads to a sustained price drop.
6 Ways to Survive the Bear Crypto Market
It is crucial to know what you can do to survive a bear market in crypto. Let’s take a quick look at some of them.
1. Do not get emotional
You can see the crypto bear markets as an opportunity to purchase a token at a lower price, or you may be uncomfortable with the price falling. But it is important to remain calm and not make any emotional decisions. Emotional decisions can lead to regret.
Bear markets test investors’ patience and endurance. It could even cause many to abandon crypto. Bear in mind that bear markets don’t last forever. Bull runs that follow often outperform bear markets. You need to learn how to control your trading psychology and not be influenced by fear or doubt.
2. Dollar-Cost Averaging (DCA)
Instead of investing all your money at once, invest small amounts over time. You can take advantage of market declines without putting too much capital at risk. You can, for example, invest $166 per month if you have a goal to invest $2000 in Bitcoin (BTC). Or you can break it down into weekly and daily contributions.
You can save yourself the hassle of trying to find the lowest prices or timing the market so you don’t have to. DCA is the best way to invest slowly and consistently. You are also protected from the temptation to try to get everything at once
3. Buy the Dip
To buy the dip, you will need to purchase at a low price in order to profit from the falling price. This is because the falling price will eventually recover, which opens up new opportunities for profit.
Although buying the dip in a bear market is very common, it is important not to purchase too soon. It’s better to buy after most people have sold their holdings out of fear than to purchase too early. This can be handled by buying small amounts, such as DCA, and using price action and technical indicators for the best entry.
4. Diversify Your Portfolio
Portfolio diversification is important in hedging volatility. It is important to diversify your portfolio among different crypto assets. Staking is another option for earning crypto. Staking is an easy way to build your portfolio. It protects you against daily price fluctuations.
It is also a smart idea to invest in stablecoins. Stablecoins don’t usually make a lot of money, but it is a good idea to invest in them. It is possible to join projects in a growing crypto community. Consider projects that allow you to earn via staking, borrowing and airdrops.
5. Turn off all external voices
It can be difficult to keep your cool in a market that is exploding with many opinions and analyses from investors, pundits and crypto influencers. Your long-term success can be affected by your choices during this period. Be careful with what you listen to and read as they could cause you to make poor decisions.
We recommend that you do not check the asset prices every day to maintain a calm mind. This is not an easy task. But, it is possible to make more emotional decisions than logical ones by constantly monitoring cryptocurrency prices.
Remember why you invested in crypto. Remember that even tough times don’t last. To be successful long-term, you must keep your head clear.
Do not forget to exercise, learn new skills and maybe even try new crypto trading strategies.
6. Find the best entry points
A combination of indicators and tools can help you find entry points to bear markets. This is a great method for traders looking to quickly make profits.
Relative Strength Index, Average True Range and Fibonacci Retracement are indicators that can help you identify important market points. You can draw important prices with line tools or rectangles to help you plan your investments in the event of a bull market.
The Future of the Crypto Market Seems Bright
Bear markets are fraught with huge risks. We can argue that bear markets are a great foundation for success in the next bull market if managed well. This requires patience and strategic planning.
Losing money is not something that anyone likes. You don’t have to lose money or make bad decisions during a bear market. There are ways you can manage your portfolio effectively.
Despite volatility in the crypto market, cryptocurrencies are moving towards widespread adoption. It is likely that the number of available jobs in blockchain will continue to grow in the coming years. We believe crypto is here to stay.
