In the world of cryptocurrency, two topics can never be avoided: whether to buy the dip in a bear market and whether to chase highs in a bull market.
These two strategies are like 'defense' and 'offense' on the investment battlefield - holding coins in a bear market is a steady ground war, while chasing highs in a bull market is a fast-paced blitzkrieg. There are no absolute rights or wrongs, only suitability. Understanding the nuances of these two approaches will help you find your rhythm in a volatile market.
Holding coins in a bear market: Be a friend of time, picking up chips in the cold winter.
The market in a bear market is like a garden hit by frost, where green candlestick lines turn into a withered yellow. But for those with insight, this is the perfect time to bend down and pick up seeds.
Why hold coins in a bear market?
The joy of buying the dip: The prices of coins in a bear market are like discounted luxury items. With the same amount of money, you can buy 3 Bitcoins in a bear market, while you might only be able to buy 1 in a bull market. As long as you endure until the next wave, the cost advantage becomes the backbone of your profits.
A filter for junk: The bear market is the best tool for 'keeping the real and eliminating the false'. Those air coins that rely on concept hype will all go to zero, while projects with real value like Bitcoin and Ethereum will stand out during the downturn. The coins you hold at this time are likely the 'survivors' filtered by the market.
The secret to a more stable mindset: Buying coins in a bear market often comes with the expectation of 'long-term holding'. Even if it dips in the short term, it’s hard to panic - after all, you plan to hold for several years, and the paper loss is just a temporary numerical game.
You must avoid the pitfalls of holding coins in a bear market.
Don’t try to accurately time the bottom: No one can predict where the bottom of a bear market is. Some thought 'it has bottomed out' when Bitcoin was at $50,000, only to watch it drop to $15,000. Buying in batches is the way to go, like buying a little every time it drops by 10% to average your cost.
Patience is more precious than gold: A bear market may last longer than you think. The bear market of 2018 lasted nearly two years, and how many people couldn’t hold on and sold before dawn. Holding coins is not only about holding assets but also about holding patience.
Don't put all your eggs in one basket: Even if you’re optimistic about a project, don’t throw all your money in. Technological iterations, policy changes, team departures… there are too many black swans in the crypto world; diversifying investments is the way to survive.
Chasing highs in a bull market: Dancing with the trend, making quick money in the excitement.
When the bull market arrives, the entire market is like a firework that has been lit - Bitcoin leads the charge, altcoins follow crazily, and even coins that usually go unnoticed can double. Chasing highs at this time is like riding a galloping horse; if you’re not careful, you might fall hard, but if you can hold on, you can indeed go very fast.
Where is the temptation to chase highs in a bull market?
The thrill of short-term profits: In a bull market, coin prices might rise 10% today and another 20% tomorrow. If you catch the trend, doubling your investment in a month isn’t a dream. This speed of making money is unthinkable in a bear market.
Opportunities in hot rotation: There are always new stories to tell in a bull market - one moment it’s DeFi, the next it’s NFT, then it’s the metaverse. Chasing highs allows you to quickly tap into hot topics and ride every wave.
Flexible capital turnover: Chasing highs is often quick in and out, with money not tied up in hand. You earn in one wave and then switch to the next, achieving high capital efficiency.
Be very careful of the pitfalls of chasing highs in a bull market.
The nightmare of buying at a high: At the most frenzied time in a bull market, even the aunties at the market are discussing buying coins. Jumping in at this time can easily lead to buying at the peak. Those who chased highs when Bitcoin surged to $69,000 in 2021 are still stuck even now.
Emotion-driven trap: In a bull market, the atmosphere of 'everyone is making money' can drive you to lose your sanity. Seeing someone in the group share a tenfold gain, you might be unable to resist buying coins whose names you can't even pronounce - the result is often being left holding the bag.
Regret of forgetting to take profits: Many people made money in a bull market but always felt 'it can go higher' and stubbornly turned profits into losses. It’s like riding a roller coaster, clearly at the peak but not getting off, only to end up back at the starting point.
How to choose? The key lies in these four points.
1. Is your goal 'retirement money' or 'spending money'?
If you want to earn long-term benefits from cryptocurrency, like saving enough for a house, then choose to hold coins in a bear market. Holding mainstream coins like Bitcoin and Ethereum for three to five years is likely more cost-effective than keeping money in the bank.
If you just want to make some quick money to improve your life, then you can try chasing highs in a bull market. But remember: quick money comes fast but also leaves quickly.
2. How much volatility can you tolerate?
Can't sleep because your account is down 50%? Then definitely avoid chasing highs in a bull market; it’s best to steadily buy mainstream coins in a bear market.
If you can still eat and sleep after losing 80% and have spare money to average down, then you can try chasing highs with a small position, but don’t exceed 20% of your principal.
3. Can you understand the market cycle?
Signals of a bear market: The news is filled with 'cryptocurrency crash', no one is talking about coins around you, exchanges are laying off employees every day. This is the time to slowly buy.
Signs of a bull market: People on the subway are checking candlestick charts, fund companies are starting to push crypto products, and even usually cautious friends come asking 'which coin can make us rich'. At this point, chasing highs requires extra caution.
4. Is the coin you choose a 'strong contender' or just a 'facade'?
When holding coins in a bear market, choose those coins that 'have lasted long and are being used'. For example, Bitcoin (still around after ten years) and Ethereum (which supports DeFi and NFT).
Chasing highs in a bull market: Even if you’re trading hot topics, you must check if the project has real value. For instance, a certain AI concept coin should have a usable product, not just a white paper to fool people.
What experts are doing: Combining offense and defense, switching flexibly.
True investment experts never stubbornly stick to one strategy. They adjust their posture according to market changes like water.
In a bear market, regular investment + picking up bargains: Set aside a small amount of money each week to buy Bitcoin, and increase your position during major dips. At the same time, keep an eye on quality projects that have been wrongly sold off, like a technically strong coin that has been dragged down by the overall market.
In a bull market, take profits + leave some: Sell a portion when it reaches your target price, for example, if you've made 100%, sell half and pull back your principal. The remaining profit can be reinvested, but remember to 'take the profit'.
Always keep cash on hand: Keep cash to buy the dip in a bear market, and keep cash in a bull market to deal with sudden drops. Having cash means you won’t panic.
Finally, I want to say: Investing is a practice; don’t be trapped by desire.
The core of holding coins in a bear market is 'being able to endure'; the key to chasing highs in a bull market is 'being able to let go'.
Some people sell their chips at the lowest price because of fear in a bear market; others waste their profits into losses because of greed in a bull market. Ultimately, crypto investment tests not technology, but mindset.
Remember: When the coin price rises, don’t think you’re a god; when it falls, don’t feel like the sky is falling. Invest with spare money, and always leave yourself an escape route.
After all, the purpose of making money is to live a better life, not to be bound by numbers and become a slave to candlestick charts.
Disclaimer: The content of this article is for reference only and does not constitute any investment advice. Investors should rationally consider cryptocurrency investments based on their own risk tolerance and investment goals and should not follow blindly.
