Cryptocurrency Bear Market – In a cryptocurrency bear market, how do you invest wisely?
As a result, bear markets for cryptocurrency are often associated with unpredictability and declining profits for investors. These two steps will help investors minimize losses during these periods, which can last up to two years. They can also apply dollar-cost averaging in the long run, avoid investing without emotion, and create a selling plan.
It is the enemy of investors to experience bear markets in traditional stocks as well as in cryptocurrencies. An asset price decline is a sign that there is no end in sight for the price of assets. Investors always drop by another 10% as soon as they think prices are at their lowest, which is not only demoralizing, it also leads to significant losses in profits.
Since the beginning of 2019, the cryptocurrency market has entered a bear market, which is evident from the fact that the total cryptocurrency market capitalization is now around 50% lower than its peak. Dogecoin and Pancakeswap, including high-inflation meme cryptocurrencies, have dropped by about 70% in price; bitcoin and Ethereum, considered more promising, are down by about 50%.
This bear market hasn’t just had an adverse effect on the value of assets, it has also made cryptocurrencies less popular. Previously, retail investors have purchased NFTs and Dogecoins in droves, but have since sold their holdings and invested in other assets like commodities or the stock market. These individuals remain the primary holders of these coins cryptocurrency today are the true believers in the market and not interested in meme coins or seeking 1000% returns on unsound tokens.
The investor needs a plan in these uncertain times and should exercise caution in order to prevent losing all of his or her money. In this article, we’ll review a few tips that can assist investors with protecting their capital during a bear market for cryptocurrencies.
As a first step, investors should do more due diligence when picking which coins they wish to purchase. It is not uncommon for the majority of cryptocurrencies to see 100% to 500% gains during a bull market. When the market is bearish, only the strongest projects survive, and many projects never become viable because of a dismal product, a disengaged team, or a lack of interest in the project overall.
According to our analysis, only five of the top 25 coins from the end of 2017 reached a new high in the bull market of 2021, and the rest were either removed from the top 100 or remained there. Consequently, it is essential to back projects that are real-world use cases, have lots of potentials, and have developer interest.
I would argue that institutions and venture capital firms are far more important than individual investors, as if an investment is profitable for an organization with hundreds of dedicated researchers and investors, it should be profitable for the average person.
However, with regard to each new cryptocurrency that is considered for inclusion in an investor’s portfolio, they should conduct individually-tailored research and diligence.
As well as projects that are currently in the investor’s portfolio, due diligence should also be conducted. It is not guaranteed that a coin will hold up during the next bull market, no matter how well it performed in this one. The result is, investors should carefully evaluate their holdings and determine which projects they should sell. A project’s value will steadily decrease over time, even with a price that’s down from its all-time high, and the 70% discount may convert into a 90% discount.
Investors must be emotionless when it comes to buying and selling cryptocurrencies. This is another essential trait of a successful investor. In spite of the potentially hundreds of thousands of dollars at stake, investors must not be swayed by the fear of missing out, or FOMO, which causes them to sell based on fear.
Furthermore, investors must also maintain a neutral attitude when prices fall. Generally, an investor who has done their due diligence is able to identify a project’s weaknesses and take advantage of a price decrease as an opportunity for a bargain buy, not a loss of capital. If emotional investing is used as the primary strategy, investors will always buy high and sell low.
In a bull market, greed is often felt like one of the strongest emotions. Most investors associate bear markets with euphoria, and everyone feels like a genius investor during times of crisis. There is no way the markets will decline in the future, and it appears that Bitcoin will be worth $1 million by the end of this year. But the markets could always fall back on those investors who don’t invest based on emotion. That’s not the case, and these investors know that every market eventually corrects downward.
The best method to invest during the downturn if investors have chosen projects they believe in, and still wish to increase their investment is to use a DCA strategy. An investor follows this strategy by buying crypto at a set rate every certain number of days, usually every seven.
Investors can remain assured that despite market fluctuations in the short term, crypto will always sell for an average price of $1.20 per ounce every week. Furthermore, the system prevents people from “buying the dip” at $40,000 when Bitcoin is $50,000, only to have no money left to purchase it at $30,000 later.
Serious investors should craft a plan to sell their stocks during this bear market so that they lock in again the next time the prices rise. Despite the fact that we may have difficulty accepting the idea of selling Bitcoins at $50,000 when it appears $100,000 is right around the corner, staying on top of a selling plan was important for making profits. No one will ever profit from investing if they never sell.
All that worry and money will end up being wasted. With a solid sell plan, investors will have the opportunity to capture some of their gains and also gain additional potential income from the sale of their assets.
Although following these strategies will not ensure that investors will make money, they will certainly relieve the worries, doubts, and When markets are in a downward trend, they may be anxious and fearful.
To remain emotionless, dollar-cost averaging, and hold only projects that are truly worth investing in, investors need to be as objective as possible. Additionally, knowing that their investments are safe will help them sleep more soundly at night knowing that they won’t lose all their money.
Make sure you do the proper research before investing in cryptocurrencies, and you should consult a crypto expert for advice. In the cryptocurrency market, everything can happen because of its volatile nature. It is all a prediction and assumption based on the fact that crypto markets transform over time.
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