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The Crypto bear market is here and things already do not look pretty. Billions of dollars have been wiped off from valuations, whereas thousands of accounts have been liquidated.
As the dust settles & Crypto Winter begins, it is likely that more projects will go under as funding dries up.
What can you, the average investor, do in this situation?
Here are 5 Things You Can Do To Survive the Crypto Bear Market.
1. Quit Leverage In The Bear Market
Bear markets are notorious for scam pumps, as bulls and bear euphorically chase tops and bottoms on a level-by-level basis.
You may think that your favorite coin has hit a bottom and proceed to open a leveraged long position. Before you know it, the pump may prove to be short-lived and the downward trend may continue.
Similarly, you may give in to the demise theory and open a short position. Suddenly, a scam pumps the other way may stop you in your tracks.
The end result is loss of capital, which is not your goal & hence should be avoided.
The Bear market is characterized by stagnation in the short term and a downward sloping trend in the long term. It is difficult to identify trends in such a market, so the best advice is to avoid magnifying your losses through leverage.
2. Quit the Meme In The Bear Market
Any project that you are invested in and which lacks a working product that generates revenue is, as of today, a meme.
The reason is that there is nothing behind the coin except a community holding up the price and when the market gets tough, it is likely that this community will also jump ship.
What is more concerning is that all these new projects require funding to continue to develop their products and start earning revenue. The Bear market is characterized by a loss of venture capital funding for these projects, leading to many of them closing shop altogether.
If that happens, you are likely to lose all of your money.
3. Practice Dollar Cost Averaging
Dollar-cost averaging or DCA refers to the investing strategy whereby you invest a fixed amount of money periodically into a coin consistently without regard to the price.
The end result is that you end up lowering your cost base at a blended acquisition price and are primed for a value boost when the price action turns positive. Consider an example.
As can be inferred, you are continuously averaging down your position and accumulating a solid coin in preparation for the next bull run without worrying about the exact bottom or stretching your finances today.
The end result is that when the bull run comes, your profit on the trade if the last ATH is hit, shall be $7,350 instead of $1,500.
4. Practice Staking
Staking is the process whereby you delegate your holdings of a coin to a validator who participates against other validators for the right to verify transactions on the blockchain. In return, the validator earns a fee and he shares the same with you as a staking reward.
The beauty of the system is that it allows you to passive increase your holding of a coin while all the time reducing the cost base. Consider an example.
As you can infer, staking rewards will help you lower your cost, increase your coin holdings and help you get out of your losses faster.
5. Learn & Monetize In The Bear Market
Bear markets are a great time to learn, as the dull trading environment allows a break from the hoopla.
Utilize this time by investing in yourself. If you are a trader, this is a great opportunity to brush up on your technical analysis skills. If you are a value investor, learn tokenomics.
The best part?
You are learning a skill that will not only help your investing / trading in the long run, but shall help you develop a side hustle to monetize your experiences.
You would be surprised by the amount of money people are making from Crypto just by talking about it.
As an example, this gentleman has 40,000 subscribers to his Facebook page. He teaches technical analysis to a live audience – one hour every day & charges USD 10 per subscriber per month. That is a revenue stream of US$ 4.8mn per annum!
If you, the average investor, would be fine with just 10% of this per year, you need only get to 4,000 subscribers. The best part? You may use part of your income to DCA & Stake as per points 3 & 4 above to reinvigorate your portfolio!
The maxim, oft-quoted, on Crypto Twitter is that you lose one cycle and make it the next.
I am filled with stories that highlight how true this really is. The reason is simple. The Bear market allows you the opportunity to accumulate on the cheap & for the power of the staking compound.
Moreover, they allow you the opportunity to avoid the hoopla and learn.
If you are willing to exercise self-discipline and truly invest in yourself, then I have some good news for you.
Down the road, you will reflect on why the bear market was the best thing that ever happened to you.