To survive the crypto bear market, investors look for the right crypto strategy. It let them earn money despite dropping prices. How do they do it?
What is a bear market?
A bear market is an expression that refers to a situation in a market when the prices of assets gradually decline. It’s commonly accepted that we can talk about a bear market when prices have fallen by at least 20% in two months. Although people usually associate this idea with stocks, cryptocurrencies can also be in a bear market. Surviving it may require different strategies in comparison to other markets but it’s possible to maintain stability. We just need to remember crucial factors and choose strategies carefully.
Shorting: does it work in the crypto market?
Shorting is a common strategy used by investors who want to profit from falling prices. But is it worth a try, when it comes to investing in crypto? Most experts warn against shorting when cryptocurrencies are in a bear market. A lot of investors share their stories of how shorting led them to multiple losses. A drastic fall in the price of your asset may be shocking, so it can be very unpleasant, especially for beginners. But there are still defenders of this strategy, whose argument is that you can’t lose more than you’ve spent (which is one of the actual advantages of crypto).
Dollar-cost averaging (DCA)
There are many strategies that investors use when they need to deal with a bear market. But the most popular is Dollar-cost averaging. DCA requires patience because it belongs to the category of long-term strategies. It consists in buying small portions of a chosen asset over a longer period.
Imagine you want to buy bitcoin for $200. You can make an instant payment but it’s risky when cryptocurrencies are in a bear market. It’s safer to buy smaller amounts for $25 or $50.
Don’t let your emotions decide for you
Investing isn’t for bad-tempered people because it demands a lot of common sense and very little emotion. Whenever we lose something, we feel an instant need to reclaim it. But if we rush, we can only get into bigger troubles.
A good investor should be patient. You should follow the situation on the market and make rational decisions regarding buying and selling at the right moment.