Before we dive into the cryptocurrency investment strategies you should follow during a bear market, let’s first explain the difference between bear and bull markets.
What are bearish and bullish market trends?
The concept of ‘Bears’ and ‘Bulls’ has been around for quite some time. These are basically the two types of investors that exist in any market. The term originated in the stock and commodity markets – and has also been transferred to the cryptocurrency markets.
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Investors on the rise são basicamente aquelas pessoas que acreditam que o valor de uma determinada ação, commodity ou, neste caso, criptomoeda, aumentará ao longo do tempo – e, portanto, eles investem nela na esperança de melhores retornos sobre os investimentos no futuro.
You investors down are people who believe that currency prices will not be sustained in the long term and tend to sell their currency to avoid losses.
The basic difference between the two is that bulls buy and bears sell. When the number of bulls in the markets exceeds the number of bears in the markets, a general 'uptrend' forms where the price of cryptocurrencies continues to grow due to higher demand. However, when the trend reverses and bearish momentum forms, the price of currencies begins to fall – and continues to fall until the trend becomes bullish again.
Basically, bears and bulls complement each other. As markets continue to rise in bullish momentum, bears begin to appear who want prices to fall so they can enter the markets when the currency is lower. When enough bears enter the markets, the price bottoms out – and the bulls begin to re-emerge. Often, the same investor can be pessimistic at one point in time and optimistic at another, depending on market performance.
Best Investment Strategies for Bear Markets
Follow the News
It is essential for every cryptocurrency investor to follow the news, at least regarding the coin they have invested in. Set up Google News Alerts – or RSS feeds or follow news aggregators that allow you to stay up to date with everything that is happening with your coin.
While price updates are important, investors also need to keep up with the news to understand what developers are planning next, what other members of a community are proposing, what applications are using the blockchain that powers their currency, what partnerships the platform has recently struck, what the government has to say about their currency, etc. Keeping these aspects in mind will help you make better and smarter decisions as an investor in bear markets.
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Understand market trends and charts
Market trends and charts need to be observed closely. Sometimes, there are patterns and trends in cryptocurrency price movements that tend to reflect. A pattern of slow and steady decline with short boom periods is one that has formed over the past eight months. Those who were smart enough to read it early on would have predicted that coin prices are likely to fall even further in the coming months.
Therefore, one needs to take a look at the charts of the past and compare them with the current day charts to make sure they are not making mistakes. After all, those who are warned are heard. While patterns and trends may not necessarily repeat themselves – but they have a good accuracy rate, at least when you consider the quarterly movement of the cryptocurrency markets over the years, you can notice that the last few quarters always show an upward trend.
Set up Stop Loss and fill them
Stop-Losses e Targets são duas das ferramentas mais críticas com as quais todos os traders de criptomoedas precisam se familiarizar. Uma ordem de stop loss é basicamente um disjuntor que garante que, uma vez que o preço de uma moeda atinja um ponto baixo fixo, uma venda ocorra automaticamente. Isso garante que os traders não causem perdas (ou perdas melhores) em suas participações.
O que é mais importante do que a criação de um stop loss também é muito importante! Às vezes, os traders tendem a pensar que “os mercados se recuperam em breve” e reajustam seus stop loss para uma quantidade ainda menor. Caso os mercados não se recuperem, os negociadores acabam causando perdas melhores. Portanto, é preciso apresentar uma estratégia de criação de stop-loss e cumpri-lo – especialmente em mercados de baixa, onde o preço continua a cair com uma frequência muito frequente.
Invest in renowned currencies
Embora seja sempre bom diversificar seus investimentos , quando se trata de uma tendência de baixa nos mercados de criptomoedas, o melhor conselho seria investir apenas em moedas de renome, que têm um histórico de estar presente há algum tempo – e uma boa valor de mercado. Quanto melhor o valor de mercado, mais segura é uma moeda para investir durante uma tendência de baixa – pois essas moedas têm uma capacidade de saltar mais alto. Por exemplo, o Bitcoin geralmente tende a se recuperar mais depois de um acidente. Portanto, é importante investir apenas em moedas de renome, em vez de comprar altcoins menos conhecidas quando os mercados estão passando por um momento de baixa.
Understand Stablecoins
Every cryptocurrency investor needs to understand stablecoins as a concept. Basically, if the markets are going through a rough patch, buying stablecoins would ensure that your USD holdings would not be affected. Since 1 stablecoin = 1 USD, and that price is not going to change, you can divest from all other coins and put your money into these stablecoins until the time comes to reverse. Strategic use of stablecoins is a critical investment strategy in modern times when the crypto markets are going through a rough patch.
Conclusion: Staying Safe During a Bear Market
A dica final para um investimento seguro durante um mercado de baixa (ou mesmo de alta) seria nunca investir mais do que aquilo que você pode perder. O dinheiro total investido em investimentos em criptomoeda não deve comprometer suas outras operações e tarefas diárias. Esperamos que este artigo ajude você a se manter seguro e a investir de forma inteligente, à medida que os mercados de criptomoeda passam por uma fase de baixa.