I know how hard it is to survive a bear market. And the crypto ones are the worst. These expose investors to huge losses of capital and hope, so that is why I want to give you some tips and tricks on surviving a crypto bear market.
Before I say anything, I want you to look at this chart:
|06/2011-11/2011||$29||$2||94 days||-93.1%||461 days|
|08/2012||$16||$7||3 days||-56.7%||114 days|
|04/2013||$259||$68||3 days||-73.7%||210 days|
|12/2013-01/2015||$1147||$177||411 days||-84.6%||771 days|
If you haven’t already figured out, these are the major crashes Bitcoin has had up to this point. The worst one was by far in 2011, when the price went down from almost $30 to $2.
On another hand, you can view this in a positive way. Most likely, almost anyone who bought Bitcoin at $29 has regretted it for at least 461 days. But I am sure they would have sad “Thank God!” by December 2017, being in a position of getting massive returns (68,400%), from what seemed for more than a year a horrible investment idea and a waste. That thought might be a good motivation for you when surviving a crypto bear market (or at least attempting to)!
So, this is not the first time it is happening. It is just that it is very common for people to get over-hyped and excited in a long bull market (after 5 years or so, they even forget how loss feels).
There is a huge difference between investors and speculators. Speculators are the ones who get on the train because everyone does that. That is a big mistake to make. An investor who cares about his/her money and wants to cash in between moderate and very good returns are the ones who are betting on the long term. In other words, every time you invest, you have to analyse the market, which has two extremes: enthusiasm and panic. As history has proven, any market is cyclic. Bull markets are followed by drops, corrections or even crashes. This is jut the way it works.
In order to maximise your returns, you have to be a good market timer. This is very hard to achieve, but researching and becoming knowledgeable about the industry is what makes you know if the market might go up or down. You can’t know for certain. In fact, nobody knows. Not even the best, such as Warren Buffett. But they invest only in the things they know very well and are able to determine, to their knowledge, if a specific asset is overpriced. Generally, this big evaluation is determined by the enthusiasm extreme that the “investors” experience.
In fact, most of these “investors” don’t even know the market. They just heard from a friend, or they seen/heard a story or something like that, therefore they have a huge lack of information. However, they expect immediate returns. Kind of like Get-Rich-Quick. In fact, no market is a “Get-Rich-Quick” (not even cryptos apparently!). Surviving a crypto bear market should not be that hard. Even great investors are feeling bear markets when they look at their numbers, but the better the timing the easier to reduce the loss.
If you are able to understand this is a revolutionary technology, you should also be able to understand that people value innovation.
Investing in cryptocurrency is currently not an easy process. Many traditional investors don’t have access to it through a stock exchange. This is similar to gold. Until it started being traded, the process of buying it physically and storing it safe was not affordable or convenient. That is why I consider a great market opportunity will appear when and if a Bitcoin ETF will launch. You can find more about this in my previous article, by clicking this link.
So, if you see the innovation in the Blockchain technology and what it has to offer to make a difference in the current bank monopoly system, then you should not be let down by a crash. You have to be convinced and ready to lose on the short term and feel like surviving a crypto bear market is not beyond your human powers. Then it is the right time to invest.
It is a well-known fact that media is a big influencer in people’s decision regarding the markets.
Everyone knows the media is saying a lot of “untrue” things (I tried putting it as nicely as I could here). Then, you should stop listening to them in regards to your money. The last thing you want is for uninformed people to lead your financial decisions.
Give it a moment of thought: they are the ones who endorse buying at high/historical levels and selling at low, miserable levels. This doesn’t require you to know more than elementary school math in order to determine you can’t win money. The real winners are the ones who are buying when everybody is selling, and selling when everybody is buying, but that requires research and market analysis, in order to deduct.
Thus, surviving a crypto bear market can be difficult from this point of view. The public opinion is against you.
One thing I can tell you is that the crash we are currently experiencing was extremely predictable. And to make you realise that, I will tell you a story (two actually). They will make you understand how extremes were swapped and how everybody took up surviving this crypto bear market.
August 2017. I remember starting a conversation with the guy at the gym reception. We were chatting about random stuff for about 5 minutes. After that, he asked me what I thought about cryptocurrencies. He started telling me how he bought a few miners, and was about half way through recovering his investment (5-6 months out of 1 year – this was the ROI time in most case). I was astonished to see that people with little to no knowledge of the industry were jumping on this Get-Rich-Quick train. I knew it wouldn’t end well.
Another story I can recall: happening around December 2017. Shopping season. I was having a conversation with a friend. She was into gaming, and he told me about her intention to buy a video card for Christmas. But she was very annoyed about the very big prices of GPUs, and could not understand why was that. I tried to explain her the situation. The problem was that everyone was buying consumer video cards in order to make Ethereum mining rigs, which were holding the most promising ROI time (7-8 months).
Think about the biggest enemies of cryptocurrency: banks and governments. Who runs the banks? Rich or extremely rich people. And who is behind the politicians that run the governments? Also rich or extremely rich people. Why are these rich or extremely rich people so important? Because they have power. And influence.
So, think about it. Powerful people don’t want cryptocurrencies to develop. They will do anything to stop or at least slow down their rapid growth. In fact, rich people are the ones behind the press too. So they have control on two things: the law (in this case, regulation) and the public opinion.
There is a big fight on the public opinion. Whoever is its leader, that is a man of power. Because people listen to the media (point 3), they are selling if the newspaper/TV says so. “It is dangerous”, “They are extremely volatile” – are few of the words these journalists with little to no industry knowledge invoke in their articles.
Scaring investors is a good option. That makes surviving a crypto bear market harder than it is already. Only the smartest will be still standing. Their target is to reduce the number of normal, average people (the ones listening to others’ opinions without forming an own one) adopting a technology like this (in order to avoid mass adoption).
These are just few of the thoughts I have when I am in the process of surviving a crypto bear market. I hope my tricks and tricks of overcoming these hard times are useful for you. If you want to share some new ideas, make sure to leave a comment below. I am open to any chats, therefore, don’t hesitate to use this link.
P.S. I am also writing answers on Quora. Click this to go to my profile.