It’s critical to comprehend and learn about the bullish and bearish market patterns, to be able to make wiser investment decisions throughout your crypto journey. This is due to the possibility of various market trends that can result in significantly different market conditions. In this blog post, learn about four crucial pieces of investing advice for the Crypto bear market.
Before we look at the investing tips, let’s take a step back and evaluate the scenario of the Crypto bear market of 2022.
Scenario of Crypto bear market
The current condition of the crypto market has sparked much discussion and differing viewpoints. Since the start of 2022, the phrases “volatile market” and “crypto bear market” have been most frequently used concerning the crypto industry. When seen in the context of investing as a whole, the crypto space is not different from other conventional assets. However, crypto markets often see higher volatility during a bear market.
Every investor must examine the market and its historical behavior as the crypto market is transitioning through a “crypto winter” period. However, during such market cycles, investors should plan, optimize their strategies with careful study, and take advantage of such chances rather than responding out of FOMO.
Let’s start our journey to learning about strategizing for better investing in the bear market.
Investing tips during the Bear Market
Short selling or ” shorting” are terms used when traders believe a market will drop. If their forecast is accurate, they gain from it. This strategy works in various other markets, not necessarily only in the crypto market.
Shorting can be a very profitable strategy and is possible through CFDs (Contracts for Difference), derivatives, and crypto margin exchanges. By using them, traders can sell assets they don’t even own. In short, a short trade is the sale of borrowed assets at market value.
The next strategy is HODLing. Interestingly, “HODL” also evolved into the abbreviation “Hold On for Dear Life,” which refers to investors not selling their coins even if the market experiences severe declines.
In its simplest form, the word refers to a waiting-based trading strategy. It is a long-term approach and many investors’ fundamental principles. The HODLers think the secret is to hold onto their money and withstand pressure. Someday, when the market settles, and crypto is widely used, it is expected that they will be rewarded for their confidence in their coins.
It is accurate to say that future predictions are impossible. However, some investors believe HODLing is the best option; crypto will eventually replace traditional stock markets and fundamentally alter society.
#3 Buy low, sell high
Naturally, the goal of every investor is to achieve a profit. Therefore, many of them choose to withdraw when the value of crypto declines. Only a selected few people, even at cheap costs, are ready to take a chance and keep purchasing. The majority of people tend to purchase near the peak and sell near the bottom.
Some investors tend to sell their coins in a panic that they have bought around the top of the market; others seek to average down the price and have bought during 2018 when the market experienced the bloodbath. This is obvious that investors should always conduct thorough research before purchasing any coins.
#4 Don’t be dependent on a single coin.
The final advice for budding investors is to remember that diversification is the best course of action. Crypto future predictions are unrealistic, and every investment carries risk. However, diversifying your investments enhances the likelihood that you’ll make the best decision.
Nobody wants to see their investments incur losses. However, you must thoroughly understand a bear market or price fall in your mind before choosing any asset class. What rises will come down, which investors need to keep in mind. As a result, only invest the fund you can afford to lose. Use the strategies mentioned above so you don’t panic when such circumstances arise and not panic if such a situation occurs.
And finally, always DYOR!
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn’t represent any investment advice or WazirX’s official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.