It’s not easy to remain calm while your crypto depletes by half its value and the rest of the world screams hodl. Holding becomes an impossibility, and there is no perfect course of App action because you don’t want to miss out, but you also don’t want to lose all your coins. Every cryptocurrency investor is aware of the market’s volatility. While both holding and selling may be excellent options depending on your risk tolerance, it is also important to be aware of your other options.
Before that, you should understand what experts consider to be a bear market so that you don’t think there’s an impending bear market or a bear market whenever prices fall. A bear market occurs when the value of cryptocurrency falls for an extended period. The bear market lasts an average of 289 days, and cryptocurrency prices fall by close to 50%, with some falling below existing support levels.
Here are 5 ways to survive a crypto bear market
Buy crypto dip using dollar-cost averaging (DCA)
This is the practice of purchasing a certain amount of cryptocurrency whenever the market undergoes a significant bearish correction.
The idea is that if and when prices return to their previous highs, the dip buyers will profit handsomely. “When there’s blood on the streets, you buy,” billionaire investor Warren Buffet would say. Buying the dip adheres to the standard purchasing rule of “buy when low, sell when high.”
Some coins have previously fallen and never recovered, so newer investors should stick to well-known coins. While buying the dip can be done in a single trade, dollar-cost averaging is the most recommended method (DCA).
By purchasing at different points in time, you can take advantage of multiple price levels with DCA. It’s challenging to know the exact time a coin will bottom out so DCA allows you to enjoy the best possible prices.
Decreased exposure to the highly volatile altcoins market
Decreased exposure to the highly volatile altcoins market is always a good time for new investors to enter the crypto market, but it’s also a good time for developers to make money by hyping worthless coins.
When a broad market downturn starts, the first thing to do is to re-evaluate current positions, then curtail risk exposure to the most volatile assets.
Looking at a project’s GitHub account gives an idea of the protocol activity and the number of developers invested in building out the protocol is a good place to start the evaluation.
If the level of activity is insufficient, it may be one of those projects where the investor withdraws when the market loses momentum.
Use of indicators to find the ide entry point
A third way to survive a bear market is by using the relative strength index (RSI) indicator to gauge when an asset has reached a bottom or when it has peaked.
Once the channel is broken out by the Indicator line, the asset is considered to be “overbought” – overvalued – and usually signals that prices will soon drop.
The line could also break out beneath the channel. In such a case, the asset is considered to be “oversold” – or undervalued – this signals that prices will rise soon.
Diversify your investments across different crypto assets
Diversification has always been useful in every form of investment and it is a sure way of hedging risk.
Diversification is expanding your portfolio to accommodate different cryptocurrencies so that again in one crypto could offset the loss in another. Perform due diligence on all coins or tokens you intend to buy beforehand and evaluate their propensity for growth.
Invest in yourself
During a bear market, trading activities are usually low and that makes for a great time for investors to amass knowledge of the market. You could take trading courses, follow discord channels, tweets from well-known investors, and a lot more. Nothing is going on in the market so what are you losing?
Yes, investors lose money during bear markets, but losing is an inevitable part of investing. Seasoned investors are aware of this. In a bear market, the math works in your favor, but it can be emotionally taxing.
As an investor, you should be aware of your risk tolerance. Surviving a bear market is possible, but it takes planning and perseverance.
