I’m just here to give you information on what I researched so take note of two key points before we begin:
- This is not financial or investment advice (NFA) this is mainly for informational purposes
- Always do your own research to get your convictions (DYOR)
Since the market topped out at $69k we have been struggling to regain the highs, touching $32k and resting around the low to mid $40k region. Most people that bought the dip have seen the dip dip further and probably bought another dip and it kept dipping. Rekt. It raises the question: wen moon?
We need to first understand market cycles, what they mean for the bags we are holding and how we can swim through this tide of crashing prices.
Bulls vs Bears
I’m sure you have heard about bulls and bears a whole lot since you got into the crypto space. We can say when the market is experiencing a sustained or substantial growth it can be termed a bull market but when the market is in a steady or sustained decline i.e when the general market is trending higher we can say we are in a bull season and when the trend is going lower then it is bearszn — time to brush up your people skills and put up your best smile in a McDonald’s outlet near you.
Are we Currently in a Bear Market?
All I do know is, my bags are down at least 60% from the highs.
It’s a very scary position to be in. Some people say when major US stock indices drop by over 20% from their peak then we can say the trend is bearish. This is over 75% across board for a small account. For BTC alone we are currently around 40% down. Is this a bear market? According to the definitions above we have had a sustained decline and prices have done over 20% loss in their price valuations. Some people also say it has not been long enough (barely four months) so they will not call it a bear season yet.
What Should We Do Now?
First of all, we must not panic. Bear markets are a time where a lot of people are scared and would want to cash in their losses afraid of further downside. Some tokens have lost over 90% of their value and any drop below current levels will be detrimental. So from my readings, I have found some things that will help us all swim these rough tides that when we come out on the other side we will be better positioned for the next bull run.
Avoid Knee-jerk Reactions
It is extremely difficult to predict when the bear market will end (time in the market > timing the market). Lots of investors are taking funds off the table, there’s more supply than demand and what might be influencing the drop could be a pool of multiple external factors. You have to remain levelheaded. Do not rush into any decisions. No amount of emotions will save your portfolio.
Re-balance your Portfolio
Before you started buying any token you had expectations for its growth, yes? Sometimes we are caught up in the hype of the uptrend and take on some more risk hoping they play out. Well, this is a time to assess your portfolio and arrange your holdings according to their risk level. Low/mid/high. This helps you know which ones are worth adding more to and the ones you can derisk. Hold some more USD so you can ape into some solid projects which hold strong despite the dip. Maybe 15–40% can be in stables. You can scale out of the more volatile tokens and go into the tokens with proper utility, tokenomics and track record of surviving previous bear seasons. I personally will not recommend degen plays at this time. The risks are way higher. This leads us to the next point.
Dollar Cost Averaging
Dollar Cost Averaging (DCA) is a method where you make smaller additions consistently to your holdings rather than a one time lump sum regardless of current prices. What this does it evens out your investment and by the time prices go back higher, your average entry price would have increased and you will then be in profit. For example if you planned to buy $1200 worth of $STX, you can split the money into 12 bits of $100 invested fortnightly. This works a lot better for long term investments. With this you do not have to time the market.
Staking
In a bear market, you can just stake your tokens and earn passive income. It removes the pressure of watching daily fluctuations in price. Most Layer 1 and 2 protocols offer staking with different rates of returns. You could consider locking your tokens in a smart contract and earning on them.
Research (and Development of yourself)
During bear markets, liquidity usually dries up and a lot of developers lose interest whereas some still keep on building and shipping updates. They keep their communities engaged and work hard to make their token worth investing in. It is then in your best interest to find out about these tokens and ecosystems. Join their communities so you can be confident when buying into their projects despite the low prices. Also, invest in yourself, learn a new skill which you can use as an alternative source of income. You could learn software development, graphic design, you could lead communities. anything to keep your mind engaged.
There’s always a bull after a bear market. It is evident in the price action. If you then believe that these are early days, it is necessary we all remain patient and positive as we wait it out. WAGMI.
Courtesy: Degen Research Center.
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