It is best to follow the long-term trend in a bear market. If you focus too much on the short term, you may miss out on some opportunities that emerge from a broader perspective.
As with every other bear market, cryptocurrency prices are currently in a downward spiral. However, it’s important to remember that markets move in cycles and prices will fluctuate over time, not just fall.
Some traders give in to FUD (fear, uncertainty, and doubt) and start to panic selling losing assets, further impacting the price. However, this is not the best move to make in a bear market.
Instead, one of the best ways to profit from a bear market is to take the time to grow your portfolio. It’s a smart idea to diversify your investments, especially focusing on allocating capital to projects that show strong long-term growth prospects.
But before you start diversifying your portfolio, it’s important to consider the following:
Avoid FUD & Panic Sales
Bear markets create the right environment for people to spread false rumors. You’ll find a lot of speculation, opinion, and theory swirling around the web, especially during extended bearish periods. People often fall prey to these claims and opinions, which in turn can influence your decisions.
If you come across any news or claims regarding one or more assets in your wallet, take the time to review the authenticity of the source (and claim). While it may sound like a no-brainer, controlling your emotions during a bear market is not as simple as people claim.
Remember that fear and greed are two of the most powerful motivators, often forcing people to make snap decisions. And these decisions often don’t have good results. Accordingly, be aware of the market movements, plan your strategy, consider every aspect and only then execute.
Focus on maintaining solvent
Basically, you always want to be able to roll back a trade another day. During a bear market, some investors start taking large risks to recoup their losses. It is quite common to fall into the “invest to recoup all losses in one trade” mentality. However, strategies can also backfire, and this is where disciplined risk management is most important for success.
If possible, stay away from leveraged (margin) trades. Using leveraged trading during a bear market usually carries a much higher risk of losing your entire investment. Most importantly, don’t bet big on many long positions as a prolonged price drop can lead to their liquidation if you don’t have the spare money to collateralize any resulting margin orders.
Use DCA to buy more coins
One of the best ways to make the most of a bear market is to opt for a dollar-cost averaging (DCA) strategy to withstand a downward spiral. While simple, this strategy can help you build a portfolio of long-term assets that were previously beyond affordability.
With DCA, you can continue to buy smaller amounts of assets over a period of time regardless of price changes. For example, instead of buying $200 worth of BTC during the first bear market drop, you could split your purchase into $50 weekly. You can even place limit orders to benefit from price reductions. Timing the market is extremely difficult, so this approach can help balance the total cost of a position, improving your chances of entry with a good entry price in the long run.
This not only helps you accumulate more tokens when everyone is busy selling, but also increases your chances of generating more revenue than investing all your money in a single transaction .
Diversify your portfolio
Finally, a bear market offers the right opportunity to expand your portfolio. On the other hand, the prices of established cryptocurrencies continue to fall. And on the other hand, dozens of new projects prepare for the next price hike.
While there is no guarantee that the asset you choose will hit an all-time high during the next bull run, you can DYOR (do your own research) to find projects and tokens that have a good chance of working. better performance in the long run. You can use a combination of fundamental and technical analysis to gain insight into the project, its sustainability, its roadmap, short- and long-term goals, and past deliverables.
Most investors usually look at the price changes of assets before investing in them. However, to increase the likelihood of generating positive profits in a bear market, you should evaluate other metrics (such as project growth, network activity, total locked value, etc.) . For example, experts claim that some mid-to-low cap tokens like Cardano (ADA) are seeing a large amount of developer and user activity, indicating that the native token is ready to go. for future reversals.
Likewise, it is important to consider new and upcoming projects, especially those that address the existing shortcomings of the blockchain ecosystem. Grab KleverChain’s $KLV token – a layer 1 blockchain designed to promote multi-dimensional DeFi as the market prepares for the transition to DeFi 2.0.
KleverChain just launched its mainnet, which features pre-made and ready-to-use smart contracts, allowing developers to build and deploy Dapps and protocols quickly and cost-effectively. Since the future of blockchain is omnidirectional and DeFi 2.0 marks a new era for the technology in development, KleverChain and its $KLV token are well positioned to grow as the market goes up again.
Ultimately, bull and bear cycles, booms and busts play some role in almost every market, whether financial, housing or commodities, and the cryptocurrency market is no exception. Be patient, take the time to research, make informed decisions and focus on expanding your portfolio with disciplined risk management to seize opportunities during bear markets and increase prices.