The Ultimate Bear Market Survival Guide
Bear markets are scary for every investor. It’s hard to watch your portfolio lose value. Yet, selling in a bear market might not be the best strategy to minimize your losses. As an investor, your goal is to buy low and sell high, not the other way around.
Unfortunately, many people fail to grasp this reality, so they sustain substantial financial losses. This guide analyzes the best bear market investment strategies to help you maximize your profit. We also look at bull and bear market definitions.
What Is A Bear Market?
A bear market is when a market experiences consistent price falls. Prices decline by over 20%, discouraging new investors, thereby affecting price growth.
Bear markets are different from short-term price falls that occur in an industry. Often, a bear market lasts for over two months and sometimes even years. So, you need to know how to invest in a bear market.
You should not confuse market corrections with a bear market. They seem similar but differ in severity and consistency of price falls. For one, market corrections are often short-lived, so they don’t last long.
Additionally, market corrections are a great entry point for new investors hoping to buy at a lower price. While bear markets help you purchase assets at a lower price, it’s difficult to determine a safe entry. So, when you buy low during the bear market, asset prices may continue to go lower. It’s also difficult to predict how long bear markets last.
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What Is A Bull Market?
It is essential to understand a bull market. A bull market is a period when investors are buying rather than selling. During this period, demand often outweighs supply, leading to scarcity. And when an asset is scarce, it may experience price growth.
While no one knows when the next bull run will begin, it’s good to anticipate its return. Some people also use a bull or bear indicator to understand how the market performs. When the market becomes bullish, more people will hold their assets to sell them at their peak. This helps them record lots of profits.
Now that we understand what bull and bear markets mean in crypto, it’s crucial to develop the best strategies to recoup your losses and retain substantial profits.
Here are top tips to help you survive this bear market:
- Revisit your strategies
- Understand your assets
- Buy the discount
- DYOR
- Remain disciplined
- Buy at Intervals/DCA
1. Revisit your strategies
Most investors have strategies that work for them. Typically, they try to buy low and sell high. But during a bear market, most people forget about their strategy and sell off their assets. If you are an investor, you should have a specific target you want to meet. This may prevent you from selling your investments indiscriminately.
Also, when you make plans, you should stick to them. For instance, if you planned on buying an asset at $5,000, you should, provided that the asset has a lot of potential. During the bear market, investors tend to avoid purchasing any investment. While this might sound logical, you may wish you had bought cheaper during the bear market.
A way to help you buy assets at a particular price point is by setting a limit order. It’s almost impossible to buy at the lowest price, so stick to buying as low as possible. This helps you enjoy more profit during the bull season.
2. Understand Your Assets
You have to understand your assets to survive this bear market. Many projects will not make it through the bear market, so you have to look for a long-term investment. Before buying a token or a coin, look at the asset’s community or use case.
Oftentimes, traders get carried away with price growth without checking fundamentals. When you buy into a low-quality project, you will notice how quickly it loses value. It would help if you did your own research before buying your cryptocurrency to prevent this. Be thorough during your investigation. You can also read on the founders to know if the project is worth it in the long run.
3. Buy The Discount
A bear market creates an excellent opportunity to expand your portfolio. Now is a perfect time if you have been waiting for an entry point. The best investors buy assets during the bear market; they are also not afraid of taking risks.
Still, it would help if you remained calculative while you buy. Buy assets you believe would remain relevant, even after the bear market. This means you should have a long-term vision. In 2018, the digital asset space faced one of the scariest bear markets. Assets lost up 80% of their values, pushing investors to sell their portfolios at a loss.
Yet, those who bought Bitcoin during the crash enjoyed the 2020/2021 bull run. Bitcoin hit its all-time high in November 2021. In that month, the king coin reached $67,500, which is still its highest price point at the time of writing.
4. Do Your Own Research
Do Your Own Research, sometimes written as DYOR, is a common term in the digital asset space. It urges potential investors to research assets before buying them. This helps them get a better understanding of the asset.
Many investors are not well-informed; they are just interested in finding a coin, which may double or triple their money. While its good to be on the lookout for assets, you should research before investing, especially in a bear market.
Some investors don’t know how to DYOR in crypto, which can cause many problems. You need to read about the project, use cases, the community, and the team. If everything looks good, you may go ahead to buy the asset.
There are lots of pump and dump schemes in the cryptocurrency space. If you don’t research properly, you buy a may coin that will never rise again, even in the bull market. Thankfully, the internet has a lot of resources you can look into before buying an asset. This will help you purchase suitable cryptocurrencies capable of withstanding the market.
5. Remain Disciplined
It is hard to remain calm, especially when all your assets are declining fast. But to become a good investor, you have to be disciplined. If seeing your portfolio will tempt you to sell them, you should avoid looking at it every day.
Remember, the blockchain industry has witnessed several bear markets, making the bull runs even better. Reminding yourself of past bear seasons may assist you in managing investment-related stress. And if things become too difficult, you can always take a break from the market. This is better than selling at a loss.
6. Buy At Intervals/Dollar-Cost Averaging
You should not buy all the assets at once. If you want to buy $5,000 worth of coins, you should spread it out. This helps you to build your portfolio at different price points. The concept is called dollar-cost averaging, and experts use it as an investment strategy.
When you find a good coin to buy, you can set aside some money. For instance, if you want to buy $100 worth of Bitcoin, you can buy $5 worth of the coin over a particular period. So, when the bull season returns, you may make a substantial amount of profit through your strategy. Some people also use a DCA crypto calculator to know when to buy assets.
Closing Thoughts
The bear market is a difficult time for most investors, but it should not be for you. While this guide is not investment advice, it may help you manage your losses, especially with the continuous price falls. Remember to do your research and spread out your investment to build your portfolio.
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