What to do during a bear market
Following the November 2021 high of $69,000, bitcoin lost more than half of its value, falling below $33,000 in January 2022 and below $20,000 in mid-June 2022. The leading cryptocurrency dragged the whole market down with it, with its market value falling to 900 billion dollars.
This is not the first nor the last cryptocurrency bear market. In their early stages, all asset classes undergo ups and downs. Since cryptocurrency has grown popular and mainstream in the media, avoiding a bear market proved more difficult this time. Most people are concerned with pricing. And it’s difficult not to, yet concentrating on pricing risks losing the point. This article attempted to clarify what to do and what to avoid during a bear market.
Disclaimer: This is not a guide on cryptocurrency trading. Operate at your own risk on the cryptocurrency market.
Risks evaluation
Some experts and cryptocurrency investors choose to stay neutral. Given the history of cryptocurrency price volatility, the price of bitcoin will fluctuate in both directions. If you invest in cryptocurrency, you can expect significant rate swings and volatility. As a result, experts advise investing no more than 5% of your assets in cryptocurrencies, or the amount you can afford to lose. Be ready to act at your own risk!
Important to note: You don’t have to acquire cryptocurrencies because the price is rising or falling. Furthermore, ensure that you have a safety cushion in case of an emergency.
Personal finance expert Humphrey Yang admits that bitcoin is extremely volatile, with some days losing up to 80% of its value. However, if you believe in bitcoin’s long-term potential, you should disregard price swings.
Emotions
First and foremost, do not lose your head in your quest to save your crypto assets when the market is down. One of the most prevalent reasons for financial losses in trading is emotion. Fear, doubt, and impulsiveness are all bad things for investors, and it is above all calm and patience that will ensure your gains.
“If you allow your emotions to get the best of you, you may make the wrong decision,” Humphrey Yang warns. — You’ll be anxious, which I don’t think is a good way to approach investment.
Stick to strategy
When dealing with cryptocurrencies, a clear plan might become a road map that leads to the desired result. On the other hand, the absence of a clear sense of direction might be confusing. A trading strategy is also a good therapy for avoiding impulsive emotional decisions.
Also, the strategy may automate various market processes. Modern trading terminals, for example, allow you to specify levels of interest for buying and selling cryptocurrencies. For example, using the bit4you trading platform, you may easily establish trading orders that would automatically purchase cryptocurrencies. This will save you from having to constantly monitor crypto prices. If you are concerned that the price will continue to decrease even after your order is completed, don’t worry; there is a trailing stop loss in place to protect you in this case.
However, investing in cryptocurrency involves more than just buying and hoping for a profit. It is the process of selecting the best moment to invest after thoroughly researching the market, regardless of the market movements immediately following your investment.
Investing in cryptocurrency is a serious long-term financial choice. Thus, you should not base your decisions just on little insignificant events or FOMO.
If you desire speedy and secure transactions, keep an eye on the bit4you cryptocurrency trading platform. Operating on a European level facilitates obtaining a comprehensive set of wallet management features and handy payment options. Trade and exchange 57 cryptocurrencies for free while practicing Demo mode and testing strategies! With 0% trading fees, cryptocurrency trading has never been more exciting. So, don’t wait any longer to begin your crypto journey!
Valentyna Bereza, Team bit4you.
