Cryptocurrency prices have collapsed, numerous crypto projects have failed, many firms are having financial difficulties, they are no longer employing, and the usual “crypto is dead” stories are making their way into the mainstream media. So things are definitely not on the brighter side.
However, those who have been a part of the crypto world for some time are experiencing it today and have seen it all before. They know how cyclical cryptocurrency is, with bear and bull markets. In the bull market, which began in late 2020 and finished in late 2021, prices rose by double digits every day. It seemed as though the market would only rise at that time. But, when we talk about the bear market, prices may drop by 90%, then by another 90%, and so on.
Even though the past crypto bear markets corresponded with positive equity emotions, Crypto today has a strong correlation to a macro environment with a possible recession shortly.
What should you do now? Panic? High on stress and anxiety? Or should you increase your investment tally? If you have experienced a bear market previously, then you must be aware of what mistakes you don’t have to make again and how you can stay calm in such situations. But, if you are a newbie crypto investor, you are bound to make mistakes during a bear market. So, let’s have a look at what are the possible mistakes that you can make and how you can stay away from such mistakes.
Take a profit
The main question here is “whether to HODL or not HODL?”
In Crypto, HODLing/ holding or the reluctance to sell despite a bleak outlook is common. Compromising your lifestyle based on a HODL meme is not considered a wise decision; you should always remember that nobody lost everything after making a profit.
Selling a portion of your gains is what is meant by “taking a profit.” It never implies fully exiting the market. At the very least, establish sell goals, take profit levels in advance, and adhere to them. Your analytical self is always a better counsel; believe in it.
Don’t sell in panic, but also don’t be greedy.
Panic selling doesn’t constitute to taking a profit and planning an exit strategy from the market.
Until and unless you are not in immediate need of cash, avoid panic selling.
Sometimes you want to be on the top and are frightened to miss that place; in such times, you may become greedy. So, always make your selling decisions based on statistics, not emotion or suggestions on social media.
Try to stay solvent
Most investors who made crypto investments in late 2020 saw their portfolios reach greater heights in April or November 2021. However, the fireworks are over.
According to experts’ advice, don’t trade or invest with the idea of “making back” what you lost during the bull market; this is because the comparison is intrinsically false.
Revenge trading may go horribly wrong even if it may be alluring to attempt to “make it back in one trade” by engaging in extremely risky trades. Staying solvent is essential in a bear market, and it helps if one doesn’t “touch leverage.”
Leverage is a common strategy in crypto markets, but using it to purchase coins in a declining market has a significantly higher possibility of disaster and will deplete your mental capital, as well. Moreover, even if you succeed in getting a decent entry, your odds of maintaining a powerful position of that size are dramatically reduced.
Always research your favorite projects
Crypto always provides a space for innovation and experimentation. Numerous projects are created, vanish off, re-invent themselves, flourish, and are forgotten. All the crypto projects have tokens linked to them, especially in the beginning, and the success of the projects is frequently (but not always) correlated with the performance of the tokens.
All you need to do is keep an eye on new and old projects during the bearish or bullish run. You’ll need to re-investigate the projects now and then, as the projects can diverge from their original plan and discover a better product that fits the market.
Have an “ape” fund
“Apeing” is a term that gained popularity after the Bored Apes launched. It simply refers to investing in the Crypto that has been hyped in the market, and you are not very keen on having due diligence, as you believe that the Crypto is all new and shiny and may soon rise in value.
This strategy mainly works in the bull market rather than the bear market. For your future investments, you should keep researching the crypto projects, keep an eye on the upcoming ones, and have an “ape” fund ready for the right time.
To learn more about apeing, click here!
Have a life outside Crypto, as well!
Crypto is a market that operates 24/7 and never stops. Once you enter, there’s no going back; it may feel like a binge-worthy Netflix series. But don’t get carried away and lose sight of other things in life. Instead, have friends, develop some hobbies, indulge in book reading or cooking, and travel some cities.
The bear market is here to stay a little longer with us, and we should not lose our hopes on good crypto projects. However, before taking any steps towards investing in your favorite Crypto, check all the points mentioned in this article that we have curated for newbie investors (who are experiencing a bear market for the first time!)
Let’s HODL together!
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.