The cryptoactive market is going through a period of strong devaluations, with Bitcoin and Ethereum showing falls of 70% and 80% respectively in the last 8 months. Some analysts have called this period “crypto winter“, also know as “bear market”.
But the truth is that beyond the drop in prices, crypto user confidence remains intact– According to a survey this year by Bitstamp, which included 28,000 retail and institutional investors from 23 countries, the proportion of retail investors around the world who believe that cryptocurrencies are trustworthy decreased slightly from 65% in the first quarter to 61% in Q2 2022. The survey reported a similar trend among institutional investors, with 67% of respondents rating cryptocurrencies trustworthy in Q2, up from 70% in Q1. Thus, it is worth asking what investors can do in a bear market?
Bear markets are cycles characterized by declining or stagnant asset values, in this case, cryptocurrencies. One way to recognize it is graphs with descending curves, prices at least 20% lower to the highs of the last rise and a widespread uncertainty regarding the next market cycle.
Although bear markets can be a unique opportunity to strengthen investments at low prices, the truth is that it is impossible to predict with certainty how a market will behaveespecially in a market that fluctuates by free supply and demand and its participants are mainly guided by more or less technical readings based on trends.
Cointelegraph contacted Argentine exchange Ripio, which summarizes: “the bull (bullish) and the bear (bearish) market are “a mood” of the market and it is changing“The Crypto Ecosystem it moves in blocks, with Bitcoin and Ethereum (the main cryptocurrencies by market capitalization) being the assets that set the standard today and, last but not least, it is necessary to understand that the upward or downward trend is determined by the period or cut that is taken into account, so there can be a state “bearish“within a loop”bullish” much longer.
It is worth clarifying that the crypto market has gone through several cycles of pronounced ups and downs, so those who have been part of it for a long time have gained enough experience and skill to manage their assets in tune with these cycles. So what is good in a bear market?
From Ripio they recommend, first, keep calm so as not to make bad decisions. Price drops can generate insecurity, fear and anxiety. It’s very important maintain a long-term vision and take advantage of the cooling of the market to study projects and rethink the makeup of the crypto portfolio.
The graphs give us a view of what is happening, but, at the moment, it is advisable not to look at them constantly. Real-time bear market review may add to negative sentiments and cloud the outlook for the full market story.
Another important factor is risk minimization through, for example, transfer all or some of the holdings to stablecoins or continue to expand the portfolio using the dollar-cost-averaging technique.
And, as a final note, keep in mind that you should not invest more money than you can afford to lose.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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