Bear markets are a cornerstone of cryptocurrency. There is simply no way to go around it – if you invest in cryptocurrency for the long term, then you will experience a bear market at some point.
Fortunately, there is not much to fear with cryptocurrency bear markets despite the massive price collapse that cryptocurrency experiences during them. This article will cover some ways that you can survive these bear markets.
Tips for Surviving a Bear Market
Here are some of the top tips for surviving a cryptocurrency bear market. These tips are all pretty basic, but it’s worth mentioning them because people often panic when they see cryptocurrency drop 50%.
The first rule of surviving a cryptocurrency bear market is the first rule of surviving any bear market – don’t sell.
The reason not to sell is that it locks in your loses whereas holding allows the price of the cryptocurrency to recover. We know that this is simple, but so many people fall into the “buy high; sell low” trap.
You are simply better off holding your cryptocurrency. Anyway, here are some of the main reasons that people sell their cryptocurrency for a loss.
They Need The Money
The number one reason that people end up selling their cryptocurrency for a loss is that they need money. This usually happens because they invested more money than they could afford to lose into cryptocurrency, so they sell to pay rent or the electricity bill.
A similar reason people sometimes need money and are forced to sell cryptocurrency is because they do not have multiple income streams. For example, if they lose their job, then they will often sell their cryptocurrency for fiat currency.
Now, the solution to this problem is simple to say, but difficult to actually put into practice.
Don’t sell your cryptocurrency no matter what. Basically, figure out a way to earn fiat currency to cover living expenses rather than selling your cryptocurrency for a loss.
It is much better financially to hold your cryptocurrency.
They Get Impatient
The other reason people typically sell their cryptocurrency is that they get impatient. This usually comes around in year one or year two of the bear market. Cryptocurrency has plateaued at a pretty awful price with no sign of increasing in price.
Cryptocurrency investors typically start telling themselves that the price will never recover at this point and use that as justification to “cut their loses” and sell.
Sadly, this often results in a 50% to 80% loss depending on when they decide to sell.
So, how do you solve this problem?
This problem mostly comes down to people not really understanding cryptocurrency. They see it as a way to quickly make money. And this means they dump it when the likelihood of making money quickly evaporates during a bear market.
Unfortunately, there is not much that can be done to help these investors other than studying cryptocurrency, which most of them are unwilling to do.
Try To Buy More Cryptocurrency
Our next tip for surviving a cryptocurrency bear market is to buy more cryptocurrency.
In fact, buying more cryptocurrency during a bear market is thriving not surviving.
Now, there is a right way to buy crypto during a bear market and a wrong way to buy crypto during a bear market.
The right way to buy crypto?
Dollar cost averaging (DCA) the entire bear market.
The wrong way to buy crypto?
Buying it as a lump sum. That said, purchasing it as a lump sum is not that bad, but it is not the ideal way.
Also, we recommend purchasing cryptocurrency only with money that you can afford to lose. This prevents you from being forced to sell to cover living expenses or getting too attached to the price of the crypto.
Wait For The Next Halving
Finally, you should wait for the next halving of the Bitcoin block reward. This occurs approximately every 3 years. And that is your so called light at the end of the tunnel.
What exactly is a halving?
It is when the block reward of Bitcoin is halved. This occurs every 210,000 blocks.
Now, it is important because a bull market has always followed every halvening. Bitcoin bears and pessimists will say that the halving is already priced into the price.
However, that has never been true – there has always been a price increase due to the halving. And it has become a sort of meme to make fun of those that think a bull market will not occur after a halving.
This point will help your mental state during a bear market. It will also make buying cryptocurrency during a bear market much easier.
Is Crypto In a Bear Market Now (July 2021)?
It might seem that crypto is in a bear market at the moment because the price has dropped about 50% from the all time high reached a few months ago. However, crypto is not technically in a bear market at the moment.
Remember, bull markets do not have a perfectly linear line to the all-time high. They tend to have a dip in the middle before soaring to a new all-time high, which is what the current crypto market appear to be in at the moment.
With that out of the way, now seems like a very good time to purchase cryptocurrency. There is a lot of FUD (fear, uncertainty, doubt) about cryptocurrency due to more crypto regulations in China. But that FUD should not scare you too much – China has been placing regulations on crypto for nearly a decade.
More importantly, these regulations China is putting in place will only lead to the further decentralization of crypto (especially Bitcoin) as it will allow miners in other areas to begin mining.
To summarize, crypto is most certainly not in a bear market at the moment. Yes, the price is 50% lower than the all-time high, but it has only been in a slump for about a month.
You should start worrying about this being a bear market when the price does not recover for about six months, which does not seem very likely at this point. The price of crypto will probably recover with the release of EIP-1559 and as Bitcoin mining operations begin to launch in other countries.
That sums it up for how to survive a crypto bear market. Basically, you have to remember that crypto has recovered from every bear market by exploding through the previous all-time during the subsequent bull market.
That means that a bear market is a perfect opportunity to load up on cryptocurrency before the next bull market. And the cryptocurrency of choice is obviously Bitcoin, but all cryptocurrencies will perform well in a crypto bull market.