How to Survive in a Bearish Market: Tips from Experts
The phenomenon of a bearish market usually happens when traders panic due to the price drop on the online crypto exchange market. Then they sell all their assets at once, taking short positions or starting to leave the market. A domino effect is produced.
So, if you decide to challenge the cryptocurrency market, then study the trends, understand the key indicators, and get advice from an expert.
How to Identify the Bearish Market
Several factors indicate that the market is in a bearish period.
- Low trading volumes. These are signs of a bearish trend, and traders are slowing down in these situations.
- Mistrust of investors. When the stablecoins lose their connection with the dollar, such events in the world of cryptocurrencies have strongly shaken investor confidence and encouraged bearish trends.
- Macroeconomic conditions. It also has a strong impact on the cryptocurrency market. Prolonged periods of high inflation and interest rates will lead to a bearish trend. After all, people are running out of money. So, they, on the contrary, want to invest in stable things like profitable securities.
- In addition, when governments regulate the circulation of cryptocurrencies, it also leads to a bearish trend.
The cryptocurrency market is relatively young, so we don’t know how long the bearish trend may last. The first cryptocurrency bearish market was formed in January 2012. But then the cryptocurrency market recovered, getting bigger. This phenomenon recurred in 2013-2015, and 2018.
The 6 Best Ways to Survive the Cryptocurrency Bearish Market
Experienced traders advise on how to survive bearish trends even under adverse conditions.
- Keep calm
The “calm” head is one of the main helpers of members of the crypto community. On the other hand, emotions can be the biggest enemy. When working with cryptocurrencies, you should be guided only by cold calculations. To do this, it is necessary to have a clear vision of the goals that have been set and the tools to achieve them.
- Act according to plan
A clear plan when dealing with cryptocurrencies can be a roadmap that leads to positive results. Planning is also good for negligent emotional judgment. The existence of a clear strategy can also be exploited to automate some operations in the market.
- Work with the dollar value averaging method
The essence of this strategy is to mitigate the negative impact of cryptocurrency volatility on the efficiency of investment portfolios. To this end, it is best to establish an investment plan and maintain it. Having a clear plan will reduce your mental pressure.
- Emphasis on stacking
Stacking is intentionally holding an asset in an account to make money. In a bearish trend, staking is a good source of income for those unwilling to do anything before the market increases. Blocking cryptocurrencies in this way also provides “protection” against impulsive transactions.
- Transfer of assets to cold cryptocurrency wallet
Cold crypto wallets are devices that don’t have constant access to the network, so coins can’t be accessed remotely. Transferring cryptocurrencies to cold wallets is another way to avoid impulsive behavior in bearish trends.
- Deposit funds in established assets
Investing in young but not yet proven cryptocurrencies is always risky. It is worth choosing aged coins to increase the security of your wallet (for example, you can swap LTC to DOGE). Look at coins with the highest capitalization that have already proved profitable.
Surviving in a bearish period is not easy, especially for investors who are unwilling to take risks. Some investors prefer to sell all their assets at a lower price and close their positions. You should avoid behaviors influenced by human emotions and take a positive attitude. The market will definitely recover!