Keep Calm & HODL: A Guide to Surviving a Crypto Bear Market
Last year’s plunge in crypto prices presented a challenge for both long-term investors and traders alike. And even though the stats are starting to look up, there are strategies that promise the mitigation of loss during a bear market.
What is a Crypto Bear Market?
A crypto bear market is characterized by a sharp fall in the prices of assets over a prolonged period. A market is termed bearish when the fall in price is 20% and above.
The journey into the bear market often starts with an inevitable recession, where investors lose confidence, and the market begins a cycle of asset sell-offs. An eventual sharp fall in prices will follow suit; the bear market is a sentimental period because people will keep selling as the prices fall further. A simple dive into the theory of demand and supply reveals that if the number of people willing to sell is higher than those willing to buy, then the price of the asset goes down.
So when the nights are long and full of terror, here are 5 strategies to stay ahead and maybe even make a profit in the midst of troubled times.
Buy the Dip
This strategy echoes the famous phrase “Buy the dip” by Baron Rothschild, an 18th-century member of the Rothschild banking family, who reportedly said, “the time to buy is when there’s blood in the streets”. And true to his words, what better time to guarantee profit from an investment than to enter the market when prices are at an all-time low.
However, you should bear in mind that prices may continue to fall for a while after your entry before they rise again so be prepared to lose before gaining.
Play the long game
One thing is clear in the world of crypto trading and investment; sometimes maybe good, sometimes maybe shit. The only thing that is sure is that nothing is sure. The crypto market is highly volatile and even though crypto has long been viewed as a digital goldmine, like any asset, it has highs and lows. One should consider viewing the crypto market through a long-term lens instead of a quick way to make a profit now.
One cryptocurrency, in particular, Bitcoin, has gone through cycles of plunging prices and dramatic rises. In fact, Bitcoin famously crashed in December 2017, falling to around $3,200 from $20,000 in just a few days, before rebounding.
Use Dollar-Cost Averaging
Dollar-cost averaging is an investment strategy in which a buyer divides up a fixed amount to be invested, and then invests money in a specific asset at regular intervals, whether the market is up or down. For example, instead of buying N50,000 worth of BTC at once, the DCA strategy buys N1000 worth of BTC over 50 days or N2000 worth of BTC over 25 days, therefore, mitigating the risks of sharp changes in prices over short periods of time. The idea is that whether the price is up or down, you buy in guaranteeing you some profit to foot whatever loss you might make.
During the crypto bear market, this is a strategy you can employ to gradually grow your portfolio.
Trade Bundle Leveraged Tokens
Bundle Leveraged DOWN tokens allow you to take advantage of bearish market sentiment. The tokens allow you to earn 1.25x - 4x more when the price of the underlying decreases.
Although the tokens are leveraged and you can either compound your losses or gains, there is no risk of liquidation with the assets regardless of how low or high prices swing. And any of them can be bought/sold within the Bundle app.
Earn Interest on Stablecoins with Bundle Vault
There are a lot more ways to earn profits in crypto than just trading. Especially in periods when trading doesn’t yield the same returns it used to, crypto savings services such as Bundle Vault can give you an alternative way to grow your portfolio. Save stablecoins like BUSD and earn daily and annual interest on them. You’re not trading with them much anyway while you wait for markets to recover.
Test out some of these tips by funding your Bundle Wallet
Disclaimer: Cryptocurrency investment is subject to high market risk. Bundle is not responsible for any of your trading losses. The opinions and statements made above should NOT be considered financial advice. Always Do Your Own Research.