Some investors get very scared of bear markets, due to which they destroy their invested capital. If you are very afraid of bear markets, then now you do not need to be afraid at all. In a simple way, today you understand why you should not be afraid of bear markets.
What happens if you sell your invested cryptocurrencies for a profit at each of their respective all-time highs during a bull market? You become very happy as a result of the fact that you have made some huge profits. What you don't consider, on the other hand, is the buyer on the other end of your trade who has purchased an all-time high. When you celebrate, what will the buyer do? Should he be afraid to buy on top? That hardly ever happens.
Perhaps at one point, when you bought into your position, you stood like that buyer. You may have bought the top of 2018 without your knowledge, but after that, you made a good profit during the market boom and managed to sell it for a profit. What we can conclude from this scenario is that while the current conditions may be tough and bad, if you are patient and disciplined, you will definitely get your profit.
It is astonishing how many people have complained of losing money on cryptocurrencies in recent months. If you have made some risky decision or succumbed to FOMO and bet your house or all your savings on it, you have to accept the responsibility. Bear markets are not a new phenomenon. The bear market is very popular, and as everyone knows about it, Bitcoin has collapsed several times in the past. The old adage "It's not about timing the market, it's about how much time you spend in the market" applies equally to cryptocurrency.
So, if you look at the past few weeks, it may seem like this crypto market is going down and I'm losing money. You might find that frightening. But if you go back far enough, the cryptocurrency market is still on the rise.
Did you know this is not the first and worst bear market?
Bear Market of June 2011: 99% dump
Bitcoin rose from $2 in 2011 to over $32, the equivalent of an ounce of silver. Then after that, Bitcoin went down. The world's largest bitcoin exchange, Mount Gox, admitted on June 19 that hackers had accessed multiple accounts and stole millions of dollars in bitcoin. In just one day, the value of Bitcoin fell by one cent.
Bear Market of August 2012: 56% dump
In August 2012, the community discovered that a traditional Ponzi scam modified for the digital age had been duping cryptocurrency investors for months. The perpetrators, eventually charged, convicted, fined, and imprisoned, had fraudulently taken 700,000 bitcoins, promising an astonishing profit of 7 percent monthly interest.
Bear Market of April 2013: 83% dump
Bitcoin itself became a victim of its own success in 2013, as investors raced to take advantage of the exciting new possibilities spreading across the mainstream media. Trading traffic had grown so much that Mt. Gox could not handle it and continue, and when it crashed, hackers took advantage of the vulnerability. This caused an unprecedented outright shutdown of Mount Gox, dropping prices from about $260 to $50.
Bear Market of December 2013: 50% dump
When China banned Bitcoin in late 2013, there was a sudden panic, and its value halved overnight. China's relationship with cryptocurrencies remains volatile, with authorities regularly enforcing new sanctions.
Bear market of December 2017 and December 2018: 84% dump
2017 was a landmark year for the cryptocurrency market. In 2017, bitcoin broke all its records and reached a high of $20,000. Then, on December 27th, everything fell apart as speculators apparently cashed in on a bubble that took the price below $12,000. The cryptocurrency will continue to fall throughout 2018, as major hacks in Korea and Japan, as well as rumors that the two countries are preparing to outlaw bitcoin, have again caused much panic in the market and sent apprehensive investors fleeing.
Bear Market of March 2020: 50% dump
Even the epidemic did not spare bitcoin. People started withdrawing their money from their trading accounts at such a rapid rate that there was a lot of panic all over the world, and when the market fell in March 2020, the bitcoin market crashed even more. The value of bitcoin fell 50% in just 2 days. Over the course of a month, it fell from above $10,000 in February to below $4,000 in March.
Bear Market of May 2021: 53% dump
In April 2021, the price of one bitcoin was approximately $64,000. Then, in a week, $1 trillion was wiped out from the crypto market. Major hacks in Korea and Japan, as well as some countries' governments preparing to outlaw cryptocurrency, prompted investors to leave. First, Elon Musk relinquished his commitment to accept Bitcoin as payment for Tesla vehicles. Then China announced another cryptocurrency crackdown. Finally, the public became aware of the environmental impact of Bitcoin mining, leaving crypto investors in a familiar position: at the mercy of factors beyond their control.
Some new investors are too scared of a potential bear market. Those who have seen several market cycles know that there is always a bull market followed by a bear market, and with some expertise under their belt, they are ready for a buying frenzy. . And, contrary to popular belief, bear markets usually offer some great buying opportunities.
The cryptocurrency market is usually volatile, which brings great profits to investors but also losses to them. They are also significantly influenced by waves of FUD and FOMO, which can cause unpredictable price swings, times of cascading loss, and moments of stratospheric growth.
This creates good prospects for knowledgeable traders who can more easily identify and take advantage of trends in the market structure, as well as take advantage of the often predictable market volatility due to changes in supply and demand.
Don't be afraid of the bear market; use this opportunity to develop a solid strategy.
Often we get very scared of the bear market. Here we should follow some steps that help us a lot in the bear market.
Research why the market is dropping.
You must know why the prices of your invested assets are falling. Is it because of the bear market? If yes, then you should research what the reason for this bear market is. You came to know that the bear market has come because of this, and after a few weeks, the investment in the crypto market will increase. The bull market will come after the bear market. But if something has changed fundamentally, like a security incident, and you no longer trust a certain project, that's a different issue.
Let's say you buy a cryptocurrency because you think the underlying blockchain technology will replace a certain sector. Rumors that quantum computing breakthroughs have made that technology obsolete have caused the price to drop. If such reports are accurate, it may be time to reconsider your investments; your argument may no longer be valid.
Don’t panic-sell
Many investors get scared when the value of their cryptocurrency investment falls, so they start selling their holdings to cut their losses or if they think they will lose more. However, this often means that you sell short and miss out on any subsequent rebounds.
Let's say you notice that the price of Bitcoin has dropped by 25% and you decide to sell your holdings. What if the price suddenly returns to its former level? You have lost 25% and may be hesitant to buy it back.
In the short term, you never know what prices will do. might keep falling; they could also grow quickly. So put your faith in your fundamental research and investing theory. If you believe in the long-term potential of your cryptocurrency investments, you should be optimistic that the price will rally.
Always consider the market dip and take advantage of it.
Often, people talk a lot about buying at lowes and selling at highs, but it is almost impossible to keep the market this way. This is why many people opt for a long-term investment strategy: If you only research assets that you believe will perform well in the next five to ten years, short-term price changes are not a concern. They are only there for a while.
On the other side, a significant drop could present an opportunity to acquire more of your favorite tokens at a lower price. For example, maybe you've had tokens in your watchlist for a long time and are awaiting the right moment to purchase them. If you believe that they have significant long-term potential, you may want to acquire more exclusive tokens already.
However, don't fall into the trap of panic shopping. Avoid investing in some useless crypto that you haven't researched and really don't want because it's on sale. It's also not a smart idea to spend the money needed to meet other financial goals (or worse, borrow money) to buy the dip. Crypto investing remains unpredictable, and there are many unknowns, especially in the form of the potential for greater regulation. You can try to buy dips only to see prices fall further.
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