Decreases in asset value since the acquisition, are only recognized when an asset is sold for less than the original purchase price. There are a few ways in which you can survive the bitcoin bear market without incurring major losses.
The 5 ways to survive bear market are:
Think in terms of long term
Long-term trends have shown that Bitcoin has continuously increased throughout the years. History demonstrates that prices are likely to recover eventually owing to economic factors like scarcity, regardless of whether prices are declining due to a brief market correction or a more protracted bear market. Many people think that this restricted supply will lead to a long-term increase in the price of cryptocurrencies like Bitcoin. Negative price movement can be seen as transient if you invest over a longer period of time (years rather than weeks or months).
Long-term holding has so far been a successful tactic, with Bitcoin emerging as maybe the most successful large asset of the previous ten years.
Do not invest in one place in bear market
The market for digital assets is very erratic. When bears are in control, it’s impossible to predict whether the price will fall much further or experience a relief bounce. You can employ a dollar-cost averaging method or DCA during this time. DCA assists you in spreading out your investments by making little investments.
You can purchase a particular cryptocurrency or a number of them when the price reaches your aim by dividing your funds. You can choose specific times of the day or week to buy the dip, as opposed to using up all of your money at once. If the price drops further in the future, you can use the allocated funds to purchase the cryptocurrencies so that when the price increases, you will benefit.
Also read: 5 Cryptocurrencies To Look Out For This Weekend
In a bearish decline, scalp trading is an excellent choice due to the extreme volatility of the crypto market. Simply explained, scalping is the short-term purchase and sale of cryptocurrencies in order to generate modest but consistent profits. Over time, these gains accumulate to produce a respectable return.
During the bear phase, you can scalp trade using one of the two methods—manual or automated. In order to locate openings and closings when manually scalping, you must thoroughly examine the market utilizing real-time research. When using automated scalping, you can create a special trading plan based on your analysis and lower your trading risk even though you are not actively monitoring the market.
The market crashes due to internal and external issues like the breakdown of major crypto blockchains and macroeconomic factors such as rising inflation rates and tighter laws around the crypto sector. The methods described above can be a surefire way to make money even when the market is declining.
Avoid being a FUD victim
Keeping up with the most recent news and trends in the bitcoin industry is essential. Yet too much knowledge can be harmful. This is especially true during market downturns when it’s all too easy to let your emotions take over and place some transactions at the wrong time.
Also read: Cathie Wood Bullish On Bitcoin, Investing Heavily In Coinbase And Tesla
No one can foretell the future, and following your own research and drawing your own conclusions is always preferable to listening to someone else’s advice. Influencers and publications may occasionally have a financial stake in spreading FUD or FOMO in order to steer the markets in a particular way. Always try to confirm with several sources while learning about the most recent developments throughout bitcoin marketplaces.
Prepare yourself to ride out the downturn or grab profits
Converting some of your volatile crypto holdings for more stable assets is one of the safest ways to minimize crypto volatility and protect yourself during a market downturn. This can assist an investor in “locking in” their balance, lowering risk, and eliminating the need for active portfolio management.
But keep in mind that selling everything at once, or capping, might easily result in cryptocurrency holders losing money if the market abruptly recovers. This is why it’s crucial to determine your level of acceptable profit and loss before you find yourself in a situation where you have to make choices quickly.
Also read: Samsung Launches Bitcoin Futures ETF Amid Crypto Market Recovery
The post What to Do During A Bitcoin Bear Market? – 5 Things You Should Know appeared first on CoinGape.