Surviving a Crypto Bear Market is a challenging task but mostly it’s a matter of the right strategy. Diversification and recurring buys can secure your investments.
Why and how would anyone invest in a Crypto Bear Market?
The difficulty of investing in a Crypto Bear Market
Every crypto investment is risky but if you know the tools of the trade, you know how to turn this risk into your strength. Unfortunately, there are kinds of obstacles that stress out even seasoned experts. A bear market is one such situation.
What exactly does it mean that the crypto market is currently in a bear market? It means that the market’s suffered a great loss of more than 20%. It definitely spoils the plans of many crypto investors who planned to cash in on their investments soon. However, such a restless moment may be also treated as an opportunity. Especially if you know how to take advantage of it.
Reasons for investing in a Crypto Bear Market
Although investing in bear markets is very risky, there is one advantage that crypto investments offer you. It’s the lack of necessity to wait 30 days to repurchase a given asset. Buying the same security in a short time is called a wash sale and the law does its best to prevent investors from it. But if you’re into cryptocurrencies, you have much more freedom in making transactions. This wash sale prevention may scare off investors who buy stocks but it’s not a problem in a crypto market.
How to invest in a Crypto Bear Market?
Before you make your first crypto bear market investment, you should prepare for emergencies. First of all, assess your living expenses and make sure to cover your costs. Nobody can guarantee that you won’t lose your money so you must be aware of the risks. If you don’t have resources the loss of which you can accept, focus on them first. Most advisors believe that a reasonable choice is establishing a savings account that contains enough money to cover your three to six months’ costs.
Remember that some currencies always bounce back so don’t let fear mislead you. If you hold bitcoin for a little longer, you’re very likely to survive a bear market. Just be patient. Sometimes it may last months before you can profit again and it’s not wise to sell your coins at the wrong moment. All you have to do is calm down and wait for the storm to abate. For that moment, try to rely on your other investments and savings. That’s why diversification is a must for every serious investor. Only those who rely solely on one source have solid reasons for anxiety. Diversification, on the other hand, allows you to feel safe and motivated to make other investments.
Make recurring purchases to survive a bear market
Making large purchases is always linked to the risk of big losses. The probability of such a risk is even higher when we face a bear market. That’s why it seems much safer to make smaller recurring buys. Potential losses won’t hurt that much and you’ll stand a bigger chance to earn a satisfying amount.