The bear market has shocked many investors in recent months. A massive price drop was to be expected in 2022. But the early price drop in November and the relatively low Bitcoin all-time high of $68,000 surprised many investors. But now many investors have to adapt their behavior and strategy to the new bear market. In a bear market, investors have to behave differently than in a bull market. Short-term returns are very unlikely and patience is required before investors can reap profits. But what to do in a bear market? In this article, we discuss what are 5 excellent ways for crypto investors to survive in the current cryptocurrency bear market.
- 1 What is a Bear Market?
- 2 Why is the Crypto Market Crashing?
- 3 What can I do to survive in the current market climate?
- 4 What Are Ways To Survive The Bitcoin Bear Market Well?
- 5 Should I invest in Bitcoin and other cryptocurrencies right now?
What is a Bear Market?
A bear market describes a market situation on financial markets in which the values of the assets and thus the prices on the markets fall sharply. The investment climate is extremely negative and most investors are selling assets. Markets are driven by fear rather than greed.
In classic financial markets, we usually speak of a bear market when prices fall by an average of 20% from the previous price highs. In the crypto market, these percentage drops are much higher, since cryptocurrencies are usually much more volatile than other assets in financial markets. Due to the extremely high price drops and the continuous drop in prices over several months, we can almost certainly assume that the crypto market is in a bear market.
Why is the Crypto Market Crashing?
The crypto market has followed a clear cycle in recent years. The price developments of the cryptocurrencies are almost always based on the Bitcoin price. Bitcoin determines the macro behavior of other cryptocurrencies. Bitcoin, in turn, follows the cycles that Bitcoin Halving entails.
With Bitcoin Halving, the reward for mining new Bitcoins is halved approximately every 4 years. This is a built-in process in the Bitcoin blockchain that ensures that Bitcoin is a deflationary asset that will become increasingly scarce and therefore more valuable over the long term. After a Bitcoin halving, a bull market has emerged several times, which ended in a massive price increase about 1.5 years after the halving event.
After a price peak (most recently at the end of 2013, 2017 and 2021), the Bitcoin price falls massively, which heralded the beginning of a bear market. This bear market then lasts about 2 years. We saw the same behavior over the past few months, when Bitcoin price peaked in November and has since fallen almost 80%.
Other factors played a role and reinforced this development. They are an explanation of why the Bitcoin price peaked so early and fell so quickly. This includes:
- the discovery of a new corona variant at the end of 2021
- a poor performance in share prices on world markets since the end of 2021
- the war in Ukraine
- Announcements by the US Federal Reserve to raise interest rates due to rising inflation
- the eventual hike in interest rates by 0.5% (0.25% was the forecast)
In recent years, Bitcoin has unfortunately become more and more susceptible to external factors that have also been influencing the prices of classic financial markets for years.
What can I do to survive in the current market climate?
A bear market is always a challenge for many investors in cryptos. Now that you understand the development of a bear market, you should now adjust your behavior accordingly in order to survive the bear market. Be aware of the following facts:
- A bear market lasts several months or even 1-2 years . It is therefore necessary to adapt to the changed situation in the long term.
- High profits and yields are very unlikely in these times . If you are not lucky enough to invest in a new, up and coming project in time, your profits from cryptocurrencies are very likely to be limited.
- Another bull market is almost certain. In 2-3 years, the cryptocurrencies you own or acquire now could be worth many times that.
However, there are some methods and avenues you can take now in the bear market to weather the next 1-2 years well.
What Are Ways To Survive The Bitcoin Bear Market Well?
Here are 5 ways you can weather the bear market over the next few months:
1. Do not sell your current cryptocurrencies!
The worst mistake you can make is selling some or all of your cryptocurrencies. This is usually an emotional reaction of inexperienced investors in a bear market. Investors often hoped for high profits in the bear market and then wanted to sell their cryptocurrencies.
In the current cycle in particular, many investors have missed their targets. Many investors were hoping for $100,000 for Bitcoin. Selling bitcoin now would be a big mistake. The next bull market is almost certain to come. The cryptos held are worth more than you think at the moment.
2. Make money with other methods in the crypto market!
Hoping for returns from crypto appreciation is the most popular way to make money from cryptocurrencies. But there are many other methods to make money in the crypto market. We have written a summary of this in this article .
Staking in particular is a good alternative for investors who want to continue making returns with cryptocurrencies safely. If you want to take more risk, you can bet on the performance of Bitcoin with Bitcoin Futures.
3. Check out new upcoming projects!
If you still want to bet on massive profits, you should look at new projects and ICOs that can make massive profits even in a bear market. For this you need comprehensive knowledge, time to research, possibly good contacts and also a certain pinch of luck.
If you are hoping for high profits, you should look outside the top 100 in the next few months to make short and medium-term profits as well. But here, too, waiting until the next bull market could be more worthwhile.
4. Expand your knowledge of cryptocurrencies in the bear market!
In a bear market, you have plenty of time to dig deeper. In a bull market, many investors try to find the perfect time to buy or sell. They follow the short-term price movements much more intensively. This is less the case in the bear market.
During the bear market period, you should expand your knowledge about cryptocurrencies. First and foremost, look at the basics. We at Cryptoticker give you excellent articles that you can use to refresh your knowledge. Course analysis, blockchain basics, knowledge about NFTs – there are countless topics that you can now delve deeper into.
5. Accumulate “safe” cryptocurrencies!
The prices of the major cryptocurrencies such as Bitcoin, Ethereum, XRP and Cardano are currently in the basement. This is bad for the current value of your investments. But it offers an excellent opportunity to buy new coins.
The more coins you can buy at the moment, the more profits you can make in the next bull market. Above all, buying the established, large cryptocurrencies is particularly worthwhile. The probability that these coins will increase in value in the next few years is extremely high.
Should I invest in Bitcoin and other cryptocurrencies right now?
If you think long-term, an investment in Bitcoin and other established cryptocurrencies is particularly worthwhile at the moment. Prices are comparatively low and a future bull market is likely. Go into your investment with a long-term mindset and you could make a lot of money in 1-2 years!
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