Friends who have scrolled down, stop for a moment, don't swipe away. Trust me, the survival strategies on how to endure the bear market in the crypto world are all here, teaching you how to be someone who can smile in the next Bitcoin bull market!
In a long bear market, every investor faces difficulties. Recently, many fans have left messages expressing their helplessness and pain in the bear market. I have too many messages piled up on WeChat, so I really don’t have time to reply to every friend.
Looking back to 2014 when I first experienced a bear market, I also felt disheartened and nearly left the crypto space. Fortunately, I didn't, and up to now, I have experienced more than a decade in this market, going through three cycles of bull and bear.
Today, I want to share my insights and strategies for facing the bear market. I hope that during the bear market, everyone can maintain the correct mindset and strategy, persist together, and witness the beauty.
1. Bear markets are long and brutal
There have been three major Bitcoin bull markets in the past, starting in 2010, 2013, and 2016, lasting less than a year for the shortest and up to a year and a half for the longest. For the rest of the time, we have actually been in bear markets.
Historically, bear markets can be prolonged, lasting until the vast majority of investors become disappointed and exit. However, when the next bull market arrives, there will still be many new investors and funds flooding in, and the entire market will become vibrant once again.
From the perspective of growth, every round of digital currency bull markets has seen astonishing gains. In a bull market, Bitcoin's gains are typically dozens or even hundreds of times, so even if you are currently suffering severe losses, as long as you can hold on until the next bull market arrives, you are likely to see great rewards, even forgetting the pain and suffering brought by the long bear market.
Old investors make money in bull markets and accumulate assets in bear markets. New investors make money in bull markets, give back profits in bear markets, and cut losses to exit. It's important to note that there will also be many small rebounds during bear markets, but these are just rebounds and not trend reversals, nor do they indicate that a bull market is coming.
At this moment, what we need to do is to firmly hold our beliefs and persevere. Work hard, earn money outside the market, and keep ourselves alive in this market. We should not be forced to sell assets out of necessity in life, which would cause us to miss the next bull market.
2. Different strategies for different stages of a bear market
A mature investor should view the bear market as divided into several stages and employ different investment strategies at different stages.
In the early stages of a bear market, many investors are still uncertain about whether they have truly entered one, and prices often experience considerable fluctuations, with several noticeable phase increases. If you determine that a bear market is imminent, you must seize these opportunities to sell off and reduce your position, especially to clear it decisively. Adjust your thinking from the bull market, and avoid blindly trying to catch the bottom.
In the mid-bear market, the bear market pattern is often quite clear, with Bitcoin’s market capitalization proportion significantly increasing, while altcoins will plummet. Investor panic will intensify, and deep declines will become routine, with the market bottom being challenged repeatedly.
At this stage, large investors are basically in a light position or holding cash, but many retail investors are still fully invested or holding altcoins. At this time, it is best not to give up or blindly panic sell. There will still be rebounds in a bear market; find opportunities to sell small coins decisively; the best coins to hold in a bear market are Bitcoin, which relatively has a lower risk coefficient.
At the end of a bear market, it is crucial not to be left behind. The key strategy is to collect more low-priced assets for the next bull market. At this time, many investors have already left, and market sentiment is extremely low. Those who bravely position themselves are psychologically very strong, and they certainly have a firm belief in the future of blockchain. This is the best time to go all in.
An important question is, what stage are we currently in within the bear market?
3. The bear market has entered a more brutal stage
The bear market has now entered a new stage, or rather, a more brutal second half, which is what was mentioned above as the mid-term.
Shorts will dominate more strongly; the resistance from longs will weaken; panic selling will occur in groups; even valuable coins will be hard to avoid being oversold; more small coins will go to zero; the number of investors leaving will gradually increase.
In other words, the reshuffling of coin prices, projects, and investors will become more apparent in the second half of the bear market, and the pervasive pessimistic atmosphere throughout the field will become even more pronounced.
However, this also brings some positive factors: a large number of speculators exit the market; the bubble in the entire digital currency industry will be further compressed; low-value or worthless projects will be abandoned by investors; both investors and project parties will awaken from the previous heavy speculative emotions, adjusting their mindsets and beginning to face the development of the blockchain industry. All of these will lay the foundation for the next bull market. Without this foundation, it will be very difficult for a future bull market to appear.
4. Don’t speak of the bottom in a bear market
Where the bottom is, no one can predict accurately. We can judge and speculate, but do not easily use your own funds to verify the bottom. Phase bottoms are relatively easy to judge, but the overall bear market bottom is impossible to predict. In the past few months, the known phase bottom for Bitcoin was $5800, but looking ahead to the next year or this bear market cycle, where the true bottom lies could be $4000, $3000, or even lower. New investors should not blindly trust others' judgments; anyone's judgment is merely speculation, akin to fortune-telling.
In the previous three major bear markets, Bitcoin fell by as much as 85%. Based on this historical situation, the lowest point of this bear market may occur around 3000 points, but history is only for reference, and the external environment is constantly changing, so we cannot be overly rigid.
What I want to say is, do not easily try to catch the falling knife in a bear market; you must control your position. Especially in the early stages of a bear market, long-term holders should not easily intervene. The true bottom usually appears in the later stages of a bear market when the market is filled with panic and despair. For now, hold your bullets and don't rush in.
No matter how skilled a surfer is, they will always have respect for the ocean every time they go out. Similarly, in investing, we must maintain respect for the market. There are countless factors behind every rise and fall, and ordinary investors cannot truly understand the processes and connections involved.
5. Don't rush to recover losses
Whether ordinary investors or big players or institutions, most are experiencing huge paper losses. At this time, the mindset becomes crucial.
In a bear market, if you feel anxious and eager to recover previous investment losses, increasing trading frequency or investing more money can actually worsen losses.
Many friends around me who manage digital currency funds have already had very low positions and are not making any moves for months. The bear market is actually more of their time to rest and vacation.
We need to remind ourselves frequently that bear markets can be lengthy, and temporary losses on paper are normal and reasonable. Since we will experience gains of dozens or even hundreds of times in bull markets, we will inevitably also experience losses of half or even more in bear markets; this is an unavoidable rule.
A bear market is like a breakup; it's a good time to shift focus, concentrate on work, live well, and empower yourself. After some time, you will be pleasantly surprised to find that everything you wanted has quietly arrived.
Do not rush to recover previous losses, as being anxious is of no use. Even more so, do not easily become disappointed or give up. A good mindset is the foundation for doing anything. The seasons change, the sun rises and sets, and everything has its own rules; we should go with the flow.
6. Revisit investment strategies
After experiencing the super bull market from mid-2016 to 2017, many people made tenfold or even hundredfold profits and summarized a set of investment methods. However, it is essential to understand that the profit-making methods in a bull market are not necessarily due to highly sophisticated strategies; they are more likely due to the overall trend. Therefore, waiting for the wind to come is the best way to earn easily.
Now, in the bear market, we need to be more sober and rational, maintaining humility and respect for the market. We must not treat the 'successful experiences' from bull markets as unchanging truths in the bear market.
For example, altcoins that performed wildly in a bull market will mostly approach zero in a bear market. Blindly investing in ICOs during a bull market, even if you have no idea what the project is about, can yield multiples. But investing haphazardly in new projects during a bear market has a 90% chance of resulting in severe losses.
7. Go with the trend
Whether in a bear market or bull market, the most important thing for investors is to 'go with the trend.'
The market is supported by consensus. Currently, being in a bear market is a consensus, and Bitcoin is the most reliable choice to navigate through a bear market, which is also the largest consensus. We do not need to go against the trend.
In the face of a downward trend, do not hold too much luck. Even firm beliefs cannot change the overall trend. Acknowledging the fact that declines are more frequent than rises, we can only face it, reduce holdings of air coins and altcoins, and every rebound is an opportunity to reduce positions. These are all ways to act in accordance with the trend.
8. Most projects cannot survive the bear market
In a bear market cycle, most projects will see a massive zeroing out of non-value coins. If you still hold these high-risk projects, be sure to take advantage of rebounds to sell; don’t hold on to them out of luck.
At present, some worthless altcoins are still overvalued and have significant room for decline. In bull markets, they soar, but in bear markets, they lose their appeal and become worthless. It is crucial to avoid viewing altcoin prices with the standards of a bull market. Recently, there have been slight rebounds in small coins, providing an opportunity for everyone to take action.
During the bear market, even ETH has been called garbage by some people. This shows that in a panicked investment atmosphere, even relatively valuable projects can be underestimated by the market. This is a rule of bear markets, and we must maintain a good mindset, avoiding panic and pessimism.
9. The pros and cons of holding cash in a bear market
If your prediction for the bottom is below 5000 points, and you are at least an old investor who has experienced a bull and bear cycle, holding cash is certainly a very feasible short-term strategy. Many large investors around me liquidated their positions in June.
However, for newcomers who have not experienced bull and bear cycles, if they are currently suffering huge losses and still holding onto their positions, cutting losses may not be very meaningful. It is advisable to appropriately reduce positions when the opportunity arises, but I do not recommend recklessly holding cash because a significant risk in a bear market is being left behind; being out of cash could mean missing the opportunity to get back in.
Past bear markets have proven that a large number of people will not be able to hold on until the bull market. Once the bull market starts, not everyone has the opportunity and courage to get back on board. Many will find it impossible to climb back on; this is a risk that cannot be ignored in bear markets.
10. Don't chase highs or sell lows in a bear market
In a bull market, chasing highs and selling lows might yield some gains, but bringing this operating method into a bear market is extremely dangerous. In a bear market, more selling occurs under panic, or through temporary oversold rebounds, and chasing highs and selling lows can easily lead to repeated losses, much like sinking deeper into a swamp.
So if you are currently heavily positioned, it is advisable to reduce your position during rebounds. Sell small during small rebounds and sell large during big rebounds. When the panic atmosphere reaches its peak and the market has dropped to what you believe is a bottom, then gradually buy in small quantities to take advantage of the next phase of rebound, thereby reducing the overall cost.
11. Long-term holding strategy in a bear market
Long-term investors in a bear market need to focus on reducing their positions and adjusting their asset structure, decisively abandoning coins that may not survive the bear market, holding a significant proportion or even 100% in Bitcoin, and not harboring any fantasies about altcoins or air coins.
If you firmly believe in the future of digital currencies and plan to hold through the bear market, the prerequisite is to hold truly valuable assets that can withstand the risks of bull and bear cycles. Holding onto altcoins during a bear market is not accumulating coins; it is ignorance.
At the same time, one must also be clear that holding onto assets in a bear market and experiencing paper losses is very normal, but it also avoids the risk of being forced out of the market. There are pros and cons, and this can be considered a middle-ground strategy in bear markets, suitable for those with limited energy or less investment experience.
For full-time investors, as mentioned in the previous article, appropriate use of quantitative or hedging strategies can help accumulate more assets during the bear market and gradually reduce costs, which is considered a superior strategy in bear markets. However, it requires a high level of experience and ability from investors.
For long-term investors, it is essential to prepare mentally for enduring the lengthy and torturous bear market.
Moreover, the bear market is filled with negative energy and emotions. It is recommended to reduce attention to trivial information and only focus on content that truly has a deep impact on the field, such as the instructor's articles. This way, you won't focus on low-value information and won't miss out on significant changes that affect trends, which is enough to accompany everyone through the bear market.
12. Short-term strategies in a bear market
The strategies for short-term operators in a bear market are completely different from those for long-term holders. Therefore, I will separate the discussion to avoid causing confusion. Large losses often occur in bear markets, while substantial profits are primarily made in bull markets. Thus, in a bear market, our goal is not to make money, but to maintain stability. Preventing profit loss from bull markets and avoiding significant retracements should be our primary consideration.
Adjust your mindset and recognize that the main theme of a bear market is a downward fluctuation. After sideways movement, a decline is highly probable; after a big bullish candle, do not be blindly optimistic and dive headfirst into the market. Usually, after a rise in a bear market, there will be a deeper drop, so pay particular attention to the risks after a rise. Avoid chasing highs; sell large on big rises, small on small rises. When the market has dropped deeply to the point of questioning life, then it is relatively safe to buy in small batches. Additionally, controlling your position is crucial; avoid full positions. In a bear market, do not speak of bottoms; there may be eighteen layers of hell below the floor, and going all in can easily bury you.
Bear markets are inevitable in any investment field, and their positive significance is to clear out a large number of overvalued and meaningless projects from the market, helping investors filter and retain truly valuable projects. Only projects that have survived the bear market have the opportunity to become great.
What we need to do is to maintain confidence in the future during the bear market, acquiring valuable and low-priced assets. This requires us to have a broader perspective and look further ahead, without being overly concerned about temporary gains and losses.
The bear market may last for more than a year, but it could also end earlier due to significant changes in the environment. During this time, most people may leave the market; only those who can endure and get through it will qualify to enjoy the high returns in the next bull market.
Even if you are currently down by 90%, as long as you don't give up, there is still hope.
In life, just seizing one big bull market is enough to achieve a leap in social class.
Holding on is actually the most important bear market strategy!
I have navigated the market for many years, deeply understanding the opportunities and pitfalls. If your investments are not going well and you feel unwilling after losses, leave a 999 in the comments! I will share insights.
