In this article, I’ll show you how to survive the crypto bull and bear markets.
The crypto market is highly volatile, little wonder why the bull and bear markets are popular terms in this space.
We’ve seen both markets at different times, and we have made both gains and losses.
For most folks, it’s more of the latter (LOL).
If you belong to that category, don’t worry, the tips in this article will help you profit both in the bull and bear market.
Are you ready? Let’s jump in!
- Bull And Bear Markets Explained
- How To Survive A Crypto Bull Market
- How To Survive A Crypto Bear Market
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1. Bull And Bear Markets Explained
a. Bull Market
Generally, a bull market refers to favorable economic conditions.
In other words, there is a sustained increase in asset prices.
A 40% increase in price over one to two days is what a bull market or bull run looks like in crypto.
During a crypto bull market, cryptocurrencies grow in value and optimistic investors make the most of their rising crypto portfolios.
This is how you’ll know when we’re in a crypto bull market:
- Increased prices remain for a period of time;
- High demand even with low supply;
- Investors are more confident in the market;
- Certain projects are overpriced;
- Cryptocurrency is discussed in mainstream and social media;
- Celebrities, influencers, and folks who seemed uninterested in crypto now show interest;
- Prices rise hard in the event of good news and drop slightly when it is bad news.
Fun fact: The term “bull market” originated from a bull’s fighting style, wherein it attacks its opponents with its horns in an upward motion.
Now, the bull market lasts for the period when supply is exceeded by demand.
However, the bull gets tired after a while, and the market turns into a bear market.
So, what’s a bear market? I’ll tell you shortly.
b. Bear Market
A bear market is simply the opposite of a bull market.
During a crypto bear market, the value of cryptocurrencies falls by at least 20% and continues to fall.
A typical example is the cryptocurrency crash in December 2017, when Bitcoin price fell from $20,000 to $3,200 within a few days.
And the most recent crash of bitcoin price from $68,000 to $36,000 (together with the freefall of other digital tokens) in the middle of 2021.
Also, investors lack confidence in the market and this further perpetuates a downward pattern.
Fun fact: The term ‘bear market’ was generated from a bear’s fighting style — starting high, then attacking with claws downward and all its weight pushing down.
Different factors can lead to a bear market like lower trading volume, negative sentiment, lower futures market prices when compared to current market prices, changes in bank rates, government restrictions, etc.
This is how you’ll know that we’re in a crypto bear market:
- Decreased prices remain for a period of time;
- High supply even with less demand;
- Investors are not confident in the market;
- Lots of negative talks or no talk at all of cryptocurrency in mainstream and social media;
- Lack of trust in crypto analysts;
- Lower highs in the event of good news and lower lows in the event of bad news.
Now that you’ve understood what the crypto bull and bear markets look like, let’s see how you can survive in both.
2. How To Survive A Crypto Bull Market
a. Take Periodic Profits
Rather than wait till you’ve earned enough never to work again, take your profits periodically as you make them.
You may lose out on larger gains but then you’d have made some profits.
Speculative price increases are highly unsustainable, be smart!
I know that the high prices are so tempting that you’d want to profit from several projects.
Instead of making blind investments with the hope that they’ll pop in value, do due diligence and only invest in worthwhile projects.
c. Dollar-Cost Averaging (DCA)
DCA is simply an investment strategy where you split your funds to invest in bits.
It ensures that you invest gradually over time and cut through any market volatility. Cool!
Here’s another way to survive the bull market.
Remember that old saying, “don’t put all your eggs in one basket?” It comes to play here.
In a bull market, several coins are doing well so, it will pay you to invest in more than one.
But like I said in point b, don’t invest blindly, do due diligence.
e. Raise your “Stop-loss” levels
If you’re a short-term trader, raising your “stop-loss” levels will help you lock in profits as your trade continues to run at favorable prices.
a. Don’t over-leverage.
Carefully select the size of your trade based on the overall size of your capital.
b. Don’t fall into F.O.M.O.
Enter the market on your terms irrespective of the tempting sky-high prices.
c. Don’t get consumed.
I know that your portfolio is going up and up but remember to take some time away from the charts. (LOL)
3. How To Survive A Crypto Bear Market
a. Have a long term perspective
Although prices are plummeting, you’re safe when you think long-term.
Ignore the pressure to sell off because the market is low. After all, the peaks are coming.
In addition to investing long-term, you should stake your holdings rather than leave them to lie fallow.
Staking earns you additional income while you wait for the market to shift.
So, put your idle assets to use especially since most DeFi protocols are offering mouth-watering ROIs.
Hope you’re not surprised to see this tip again, it works for both markets.
Dollar-cost averaging helps you to grow your portfolio gradually irrespective of the market movement.
Sounds great, huh? See how it is done here.
d. Add to your knowledge
Trust me, the bear market presents a good opportunity for you to better understand the crypto market because you’re not in a hurry to make large hits.
So, take your time to study the market thoroughly and adopt more profitable strategies.
You want to focus on:
- Technical analysis – to know good entry/exit points;
- Fundamental analysis – to spot undervalued projects with good potential;
- Sentiment analysis – to understand the emotions accompanying the market;
- Risk management – to learn how to manage your risks and diversify your funds.
[Suggested Read: Trade Crypto Like A Pro – Technical And Fundamental Analysis Explained!]
e. Invest in coins with an impressive history
Such coins hold good promise, so you can buy at a low price now and then sell high as the market shifts.
But remember that the crypto market is highly volatile and as such, we cannot be sure of anything.
f. Invest in new projects
In addition to coins that have a good history, you should also consider investing in a new project.
By new projects, I mean coins that are still in the pregnancy stage.
New projects have DAO (Decentralized Autonomous Organization), which allows members of the public to participate fully in building the project.
Not just that, you also have a stake in these projects so you get to share in their profits.
The bear market presents a good opportunity to invest in upcoming projects and benefit from their growth.
Again, remember to do due diligence before investing in any new project.
a. Don’t short the market.
The time to short is likely over. Shorting with the hope that the market will continue to drop to zero may do you more harm than good.
b. Don’t be fazed by hype.
In a bear market, beware of “hype” because it might just be frustrated traders trying to sell-off.
Always complete fundamental analysis to know the right project to invest in.
c. Don’t panic sell.
It may look like you’re curbing losses when you sell but you’re not. Just hold on and go long-term to recover your supposed losses.
Hey, did you notice?
DCA and diversified investments are helpful in both markets.
I’ll pay attention to them if I were you.
All the same, remember to manage the risks you take in crypto trading.
Only invest money you can afford to lose.
To help you trade profitably and curb your risks, we curated the perfect course for you.
The bull and bear markets are inevitable in the crypto space. And they usually follow each other.
When Bear markets calm down, investors slowly gain confidence, and that kick-starts the next bull market.
Ensure you are properly informed and well-equipped to spot and act on lucrative trading opportunities in both situations.
Obeying the tips described above is a good start.
This is where we’ll draw the drapes in our discussion on how to survive the crypto bull and bear markets. I hope it was worth your time.
Now, I’d love to hear from you; tell me your favorite tip from my list in the comments section.
Also, if you have other great ideas that I didn’t mention, feel free to tell me.
You know what else would be great? If you shared this post with your friends. Thank you!