HODLing Through Bear Markets: How To
WOW. Society is currently faced with the possibility of a global macroeconomic recession, war in eastern Europe, COVID lockdowns in Asia, domestic terrorism in the US, supply chain constraints across the board, record-high inflation across every basket of currencies and now the crypto markets are experiencing one of their worst crashes in history.
Just reading these words is stressful. So what can you do?
While, a previous post shared a few ways to consider investing in the cryptocurrency markets, this one focuses on a long-term approach to participating in the blockchain ecosystem along with a few things you can do to stay sane during wild times.
- Revisit your investment theses — an investment thesis is a reasoned argument for a particular investment strategy, backed up by research and analysis. Depending on your level of investment sophistication, this research and analysis can range from highly technical analysis to a more intuitive approach. Think deeply about what your position is on current assets and asset classes. Moreover, think back to what position was when you first started investing.
In the case of HODLing, remind yourself that investments only win or lose when they are realized. So if your position is sitting below your average investment level (in the red) realize that price action doesn’t matter until you liquidate.
Consider turning off price notifications, if you use them and even using smart device capabilities to limit exposure to the constant flood of headlines about the daily or hourly performance of crypto assets.
2. Have a plan — this includes portfolio allocation percentages, time horizon on a per-investment basis, diversification strategies, and so-on. Want to see a good example of a plan? Check out legendary Bitcoiner Michael Saylor and the plan he’s established to navigate inevitable market downturns.
3. Have another plan — a plan, by definition, can change. In backcountry touring there is the concept of multiple routes A, B & C because most things don’t go as planned, especially when dealing with forces outside of your control (like avalanches). The same goes for investing. What if prices move in an unexpected way, or an investment vehicle becomes unavailable? What if your personal situation changes or you can’t access certain funds?
You may have heard the term ‘dry gunpowder’ referring to some liquid, investable assets that you maintain (typically cash) on the sidelines, uninvested, to take advantage of investment opportunities that arise during period of undervaluation in certain assets.
It’s always a good idea to have some dry-gunpowder that can be allocated when things are “on sale” as we like to say.
4. Educate yourself — education is one of the most beneficial uses of time. Cicero asserted that a life in the pursuit of useful knowledge, honorable action and the practice of virtues yields an unthinkable comfort to the soul. At Mr. Block we are on a mission to onboard others to the crypto ecosystem through education, participation and collaboration. All of our educational content is FREE and we want you to be a part of our journey. Join us here!
5. Take care of yourself — whatever that means for you. Some ‘fill their buckets’ through rest and relaxation. Others thrive off stimulus and activity. What is important, is to find a way to reduce your stress (cortisol) through whatever works for you. There are tried-and-true practices for this that can be distilled to healthy sleep, healthy energy and healthy activity. There are annals written on these topics so it’s too extensive to review here, but the point is: figure out what makes you feel good long-term and do those things consistently. If all else fails, remind yourself that we’re funny looking creatures living on a really big rock that’s flying around a super bright star in a universe of infinite reach.
At Mr. Block, we strive to be your friend in crypto; a safe place for newcomers and enthusiasts and collaborate on market information and opportunities. Lean on us or your communities of choice during hard times and never fight the bear alone!
Disclaimer: nothing in this article constitutes as financial advice or inducement to make a particular investment. Do your own research and make your own decisions.
