Home The 5 Strategies for Surviving in a Bear Market

The 5 Strategies for Surviving in a Bear Market

Trading

6 min read

As you know, financial markets are cyclical. There are up times and down times, to put it simply. However, for crypto traders and investors, it is often the bear market that is the most feared.

What do we do or what should we do when the Bear Market is Coming….

Sometimes I feel like it's harder to stay calm in the face of the possibility of another crypto Bear Market than in the face of the gaunt zombies in Game of Thrones.

And yet, whether we like it or not, we'll have to weather the storm , hoping to salvage as much of our crypto as possible from the clutches of the big bad bear… The good news is, you can make money regardless of the market. And, as you know, you don't lose anything as long as you don't sell.

Before outlining strategies to avoid being completely wiped out before the next bull market, the first thing to remember is that you're not alone in this mess…

According to the latest data shared by Intotheblock , 28% of bitcoin investors, more than 31% of ethereum investors and 87% of those who have invested in Cardano are currently in the red.

Not exactly something to celebrate, admittedly… But as I told you a few weeks ago, we've been through this before! The key is to start by…

1. Have a realistic vision and invest when you are ready

It's important in a bear market to see the long term. This is how you will not end up being cheated by the crypto bear market.

Remember that in a bear market, crypto prices are at their lowest. This means it's a good time to invest in Bitcoin or another cryptocurrency. Prices are naturally more attractive. That said, be careful to choose the right cryptocurrencies. For this, nothing is more useful than conducting a thorough fundamental analysis.

It may seem obvious, but managing your emotions during bear markets isn't as simple as it appears. More effective than yoga, I advise you to remember that fear and greed are more than just feelings; they are indicators that should guide your investments. And above all, prevent you from making rash judgments that could cost you dearly.

For many investors, the bear market is also a good time to go shopping, to put it simply.

Another way to stay on course without losing your mind is simply to keep your eye on the horizon. Or, to put it less poetically, to have a concrete, long-term plan . It can't be stressed enough: the crypto market is highly volatile.

Like anything active, it has ups and downs. Instead, consider it from a long-term perspective, keeping capital in reserve to survive the new crypto bear market that is coming. And above all, don't forget to keep your cool when the ugly bear comes scratching at your door.

2. Consider passive income methods like staking

It's normal to feel uneasy in a crypto bear market. Nobody likes to see the value of their assets melt away. However, to mitigate your losses, there are many profitable strategies available. One such strategy is staking , which essentially involves locking your crypto on a blockchain for a specific period in exchange for passive income.

Staking is perhaps the simplest way to increase the value of a portfolio in the long term. But above all, it alleviates the pressure caused by value fluctuations, since the asset you stake continues to earn you tokens.

Most Layer 1 protocols offer the ability to stake their native token on the network in exchange for a reward. This is the case, in particular, for Solana (SOL ), Cardano (ADA) , Polygon (MATIC) , and Avalanche (AVAX).

There are several platforms for easy staking. You can also stake directly on dedicated wallets for your chosen cryptocurrencies. We personally do a lot of staking on DeFi protocols, but we also use MyContainer. It's a platform where you can easily stake your cryptocurrencies.

Staking on MyContainer

3. Lend your cryptos and generate passive income

In a bear market, just like with staking , you might want to look for other ways to earn money. For example, you can lend cryptocurrencies . This is a popular method for making money relatively easily.

You can do this on CeFi using simple platforms like Youhodler or Nexo , for example. Simply deposit your crypto to receive your interest payments weekly.

This is a very good way to limit losses in a bear market. Choosing to do this with stablecoins can also be a good option . Crypto stablecoins are pegged to fiat currencies, which are subject to inflation, of course. However, you limit the volatility that can sometimes be fatal in a bear market.

Generate interest with Youhodler

4. DYOR and work b.tch!

While we'd all love for (good) information to be handed to us on a silver platter (and for the moonshots to suddenly become Madame Irma), there's really no way to escape it. If you want to survive the crypto bear market, you'll have to do your own research. This will not only allow you to put the carnage unfolding before our very eyes into perspective, but also, and more importantly, to use the right indicators to find the best entry point.

Now that you know the basics of Baron's crypto fundamental analysis (no less!), you'll not only be able to select viable long-term projects, but also predict asset movements to anticipate dips.

A popular method is to use the Relative Strength Index (RSI) indicator – a momentum oscillator characterized by a channel and a line that oscillates inside and outside of it.

There are two key elements to remember to use this tool properly:

Overbought: : When the indicator line crosses above the channel, the asset in question is considered “overbought” – in other words, overvalued. This usually signals that prices are about to fall.
Oversold : When the indicator line breaks out below the channel, the asset in question is considered “oversold” or undervalued. This usually signals that prices are about to rise.

5. Follow a DCA (Dollars Cost Average) strategy

Again, it's a matter of common sense. To limit your risks and emerge unscathed from the crypto bear market, it's crucial to diversify your investments. And don't bet on a single asset, or you risk losing everything.

Just as it is almost impossible to accurately predict the bottom of a bear market, it is also impossible to know exactly which of the more than 17 cryptocurrencies in circulation will recover fastest or go “To The Moon”.

A good way to hedge your bets is to use dollar-cost averaging ( DCA ) across a range of different assets. In practice, this involves dividing your reserve funds into smaller tranches and making multiple trades over time.

Of course, this doesn't mean you can skip proper due diligence … Before investing in crypto, and with a view to surviving the crypto bear market, remember to analyze:

The previous absolute record for having a better idea of the potential of an asset;
Past performances (via TradingView, for example) to see how a crypto has recovered from a previous crash;
Announcing the future road map: a new update or new development in an asset's roadmap are good indicators of a speedy recovery!

I hope you feel better equipped to face the coming crypto bear market! Take heart, or as a minister I don't particularly like once said… “ It'll be alright .”

Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.

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