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The crypto market has reached a place where it has managed to increase its potential in terms of volatility, and prices are being slain left and right of all the crypto assets that are available for trading Bitcoin, being the flagship cryptocurrency is the least stable.
You might generally assume that being the flagship cryptocurrency that is Bitcoin and having the highest market capitalization in the whole crypto market, it is going to be stable, offering incredible returns on your original investment and just an incredible overall opportunity to pour your money in.
But in reality, Bitcoin is the most volatile of them all. Having a general bird’s eye view of the progress of this cryptocurrency over a certain period of time will help you to analyze just how lacking the experience has been and how sustainable volatility is for Bitcoin. When the cryptocurrency started trading within the crypto market, it was being sold for mere pennies, but no one was interested back in the day, and therefore the trading volume was next to nothing.
As the hype continued to grow and investors started to take notice of this type of finance that was decentralized, Bitcoin became the mainstream cryptocurrency, and the price action continued to increase over time; within weeks, the cryptocurrency was trading from $1000 a piece all the way to $8K or $10K even which is a lot considering something that was worth nothing only a few months back is now a sensation within the financial market.
The years continued to pass, and many crypto projects continued to prevail and appear within the crypto market; at the same time, Bitcoin continued to lose its hold over the monopoly of having the entire market capitalization of the crypto market to its name as many other altcoins continued to rise to the horizon. But still, to this date, after ten plus years, Bitcoin has the largest market capitalization in the crypto market, and no other cryptocurrency has managed to surpass it.
But talking about the price action after reaching an all-time high price of $67K, Bitcoin has been in a continuous bearish slump which means the price has deteriorated to be half of that particular all-time high and even lower as the days progressed. Today the base price of Bitcoin is lacking under $20K, which is extremely annoying for the investors who potentially have bought Bitcoin for far more money.
A bearish market is a concept that integrates with the volatility aspects of our financial markets and has a negative effect on the price action, temptation of the investors, and their general belief in a crypto asset to rise to the occasion. Investors have definitely lost touch with the crypto market, especially Bitcoin, as many other options are present within the market as an alternative to Bitcoin, so they are exploring the market to its full extent and just ignoring Bitcoin because of extreme volatility and the cryptocurrency being in a consistent bullish slump.
Why Invest in Bitcoin?
It has been established earlier in this article that Bitcoin has lost almost half of its value in a period of three months which is extreme volatility for any financial asset to have ever traded within the crypto market. But given the fact that it is the primary flagship cryptocurrency of the crypto world, it is only a given that Bitcoin has managed to retain its position for all those years only to lose it at the end and lose it hard. The consistent bearish slump is not pertinent to Bitcoin only; many other cryptocurrencies or coins, stocks, forex, and various other commodities have also lost their value given the recent financial crisis that has overgrown the entire world.
If we talk about the recovery of these assets or these rebounding to earlier potential price ranges, then it is presently out of context because of the fact that the macroeconomic trends and the assumptions of the analysts around the globe do not refer to a recovery happening anytime soon.
It is not a permanent thing per se because in the past, these cryptocurrencies and stock elements have plummeted to their worst and still have managed to rise up once the tide settled down and the market was seeing a brighter, more profitable sunrise before it. But it is certainly a dark and vivid tornado for any financial market, especially when the bearish market has sustained its position for far too long.
What is a Bear Market?
A bear market is referred to a particular time period for any financial market when the price action of the tradeable assets has declined from an earlier, brighter price point and continues to do so in a prevalent fashion. There is no guessing the end of the pit for this kind of market because there isn’t one; it is entirely possible that prices might continue to get slain across the board and even manage to recoil themselves into a freefall with no apparent cushion at the bottom.
A bearish market is completely opposite of a bullish market, and just so it happens, it is the worst possible time to invest your money into any financial market; you are not going to get any returns for the investment that you have made, and therefore it is only advised that you sit down and relax and let this storm pass. When bullish market returns, now are your opportunity to put down your money and your investment into it to gain handsome returns in the future.
You might have come across these two specific terms whenever an investor or trader is talking about market fluctuations, and these are the bearish and bullish markets; these are two different instances of the same market, and these are metaphors for the two main animals that are bulls and bears.
Bulls are associated with progress, a consistent price increase of the assets across the board, and various other associations that are generally positive, whereas the bears are associated with negative price drops, the sentiment of the investors generally dropping and lacking across the board, and other such associations that have in a negative effect on the market.
These are the market movements that are prevalent for a concise period, and it is important to have a clear-cut association of why these two animals were used to discuss the movements of the crypto market or any other financial market for that matter. It is important to understand how these animals tackle their opposition and fight off their enemies.
Bulls are associated with charging up before they hit their target and use their horns to push the victims from down towards up whereas bears are associated with using their paws to smack their opponent from above into the ground hence the price movements that are associated with these two animals in any financial market out there.
So whenever you hear that, at present, this financial market is bearish, that usually means that investors are pessimists around a particular asset and the future prospects of that particular asset, and they have no interest in assorting their money or pouring more investment into that particular asset. It is also worth mentioning here that either the whole market is going to be bearish or few of the assets are going to be; it is like a ‘to and from’ game.
You can associate multiple assets being bearish while some of the others being bullish, while all the assets that have ever existed within the market are either bearish or bullish. Whenever this market is pertinent, the investors would try their best to sell off their assets, so they don’t lose any more of their money, which definitely makes sense, and when they start dumping their positions, the overall market just begins to drop like a big old ball of domino, and it is not a pleasant scene for anyone to observe.
There is a general rule of thumb when it comes to bear markets, and that is the fact that these markets and their duration to rule tend to be a bit longer than the bullish market, for example, but at the end of the day, this too shall pass the attitude that any investor who is exploring any financial market should have within a bear market.
It is a long waiting period for sure, but at the end of the day, it is also going to subside, and once again, there will be a bullish market, and that is the exact emblem of prosperity, the sentiment of the investors going up and consistent increase within the price of the assets across the board.
There is a long heated debate among the investors, traders, and analysts of various financial markets that a bear market happens because a bullish market bumps up the price of these assets a bit too high and there is a requirement in effect to tackle those prices and to have them return to their base positions hence market corrections and therefore the need to have a bear market.
But at the end of the day, it is just the cycle of a financial market, and it has to happen for the good of everyone. On the other hand, a bullish market is an extremely short period market, and you have to be ready to grab that opportunity by the collar and to have your eyes on the prize.
Because at the end of the day, you are not going to get too much time figuring out how you are going to tackle a particular position, it is either do or die in a bullish market, and you have to be ready with the investment if you want to make a fortune or have incredible returns on your original investment.
Best Ways to Survive the Crypto Bear Market
It is extremely over the top and far-fetched for anyone to tell you just how long a bear market is going to be, it can be over in two weeks just like the snap of your fingers, or it could take weeks or months on end and in worse possible cases even years and no one is willing to wait around for a full year to dump their assets and get out of the bad position that they have created for themselves by investing in a bear market.
First of all, there are literally no investments that are taking place within a bear market; it is just not feasible or economical for the investor to do so. There is this golden rule to invest in any financial sector, and that is ‘to buy low and sell high’, which means that you buy something or invest your money into a potential asset whenever the price of that asset is at its bare minimum and whenever the price has improved from the state at where you bought the asset in the first place there is your profit, and that is when you dump your position and sell the assets.
It is not rocket science but the process to perform a successful trade sure is. Because no matter how strong or competent an investor or trader, you are in the bear market, and all the associated complexes for that particular market are going to get to you one way or the other. This is an extremely harsh period to survive for any potential investor out there. You will be extremely glad to know that there are some investors who genuinely wait for a bear market to come and the bull market to be over so they can make some money.
Yes, these are the people who wait for the bull market to arrive so that they can buy assets dirt cheap and then hold on to them for months or years in the end because they want to turn them in and earn a handsome profit, but that is not going to happen until the market reverses itself to a bullish cycle. So, if you are an investor who is tied up with the rumble of bear and bull markets and want to know how one can survive a bear market, then falling or some of the steps that you can take to do just that.
HODL is a Good Strategy
Human psychology is involved in making decisions that we don’t even interpret in our minds, but we have this feeling in our gut that this decision is right and it needs to be taken right away. Human psychology does play an important role in our decisions making, and whenever the market a collapse and the losses are just piling up not only in a matter of weeks or hours but in mere seconds, it becomes extremely hard to have a clear head or to focus on the game.
This is extremely normal, but at the same time, caution is advised because when your head is not in the clear, all the decisions that you are making might come out to be wrong or challenging in the long run. So whenever the market is in a fix, or you are not sure where it is going to turn next, the best thing to do is to HODL, which means that you continue investing into a dedicated asset or two and just keep your head above the water to survive the bear market.
And when the bullish market arrives, and the prices of the assets have improved, you would have made an incredible profit or return on your original investment, and that is really something to show for, especially when you were surviving a harsh bear market. The best thing that you can do is to stay calm and just keep breathing and continue investing in that potential asset until your position begins to show some returns.
Stake Your Assets
When the markets are in freefall, there isn’t much that you can do about it, but if you are interacting within the crypto market, then there sure is. What you can do here is you can stick your cryptocurrencies into a dedicated mining pool and continue to earn rewards on your investment. These mining pools are not governed by which market cycle is prevalent at the moment, but they have their own predetermined rules that are governed by smart contracts so you really don’t need to worry about it.
They won’t let your investments go futile in the end because no matter what particular cycle is prevalent at the moment, you will continue to earn rewards for your investment. You can either lock your cryptocurrencies for an indefinite period, or you can have them staked for a determined time period which allows you to have your cryptocurrencies locked for that particular time period, but when that time period is over, you can just cash them out and use them however you want.
This is a rather brilliant approach that you can have with the crypto market, especially if you have the professional-level trading skillset to pull off the job.
What happens is that you create a short-term selling opportunity for yourself which means that you are going to invest in dedicated cryptocurrencies that are available for extremely less at the moment, but with a potential to fall further; you buy these assets, sell them when the market recovers a bit to earn profit and then buy them once again when the price drops. You continue with this approach until you have amassed a lot of profit doing so hence the short position.