Bear Market is excellent buying opportunities

Bitcoin has already dropped to around $20,000, and the crypto market’s capitalization has dropped by over 60% in the last six months, signaling a strong pessimistic trend. However, this is an excellent moment to take a chance and diversify your cryptocurrency portfolio. Or not? Let’s figure it out together!

Bear markets are part of healthy market cycles

If you trade cryptocurrencies, you’ve undoubtedly heard about the bear market. Investor sentiment and behavior are greatly influenced by bull and bear markets. Many people associate a bear market with gloom and doom. However, it is important to note that a decline, like the four seasons, is a perfectly natural market cycle.

A bear market is one in which the value of crypto assets falls by 20% or more from their prior highs and remains due to fear and pessimism.

Bear markets more often develop during a recession and reflect a widespread economic deterioration. The last two times we witnessed them in the US stock market. In particular, they were in 2008 and 2020, with falls of 56.8 percent and 33.9 percent, respectively.

You can benefit in both markets if you get it correctly. Even if the market is in a bearish trend, you may still generate income. Some experts consider short selling as a suitable strategy for a bear market. However, this often is a high-risk strategy for experienced traders.

Who creates the bear trend?

According to University of Edinburgh Business School Professor Jens Hagendorff, “it is more or less inevitable… so as long as company earnings vary, as long as there is uncertainty in this economy, we will see some type of cycle.” Hence, only in a world without uncertainty — where company earnings are foreseeable and people’s employment is entirely predictable — would there be no bear markets.

According to Professor Janette Rutterford of the Open University Business School, the market cycle is mainly wavy. She believes that people exaggerate the market movements themselves, and that’s sort of behavioral. According to her, she doesn’t understand how telling someone they’re wrong will stop them from doing it (i.e. selling assets when the market is moving down).

How to survive a bear market?

Some experienced traders have bear-market tips. Bear markets can turn into bull ones after some time. Once the bottom is reached, prices might skyrocket. One of the most important skills for every investor is managing emotions and making sound judgments. It seems easy but staying sensible when an asset is down tens of percent is difficult. The desire to sell the coin at a loss is strong. But keep in mind that your losses and gains are only hypothetical until you sell them. In a bear market, really strong projects don’t lose strength; once the trend shifts, their price is more likely to rebound.

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If you have some questions on how to operate on the platform, please do not hesitate to leave a comment below!