How to Survive the Bear Market (for crypto & stocks)

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Indexes
  1. Bear Market of 2022
  2. What to do when a bear attacks…
  3. Special warning for crypto lovers
  4. Investor’s psychology
  5. Conclusion

Apparently, we have entered a long-awaited bear market.

For those who are unaware, a bear market is one side of the investment market's behavior. The flip side of this is a Bull market.

The two animals have been used to symbolize two different market conditions based on the way they attack.

Bulls use their horns to attack in an upward motion — the market conditions correlating to this symbolize an upward movement or growth.

Bears stand on their feet and use their hands (paws or whatever you want to call them) to attack in a downward movement — the market conditions correlating to this symbolize a downward movement, a drop, or even a market crash.

Bear Market of 2022

Both stock markets and cryptocurrency markets have been on an upward since forever.

The holy grail of stock market indices, S&P 500 has seen unprecedented growth in the last decade.

The same goes for cryptocurrency. The daddy of all crypto currencies; Bitcoin, was only $1,100 in April 2017. It cracked $60,000 in April 2021.

The truth of the matter is the entire world behaves cyclically. What this means is that we go round and round in an endless loop of actions and causes.

So, what goes up, must come down.

Enter, the Bear!

Experts are saying that this will be the worst bear market we have seen in a while, and it has only begun.

The S&P 500 has lost 800 index points since the beginning of 2022. For context, this is a year’s worth of growth lost in 5 months (and again, it’s only beginning).

Bitcoin recorded its lowest price for the year, just hovering above $30,000.

All other cryptocurrencies and altcoins follow the BTC trend, so Ethereum, Binance Smart Chain, and Cosmos Ecosystem have seen record-level dips.

What to do when a bear attacks…

The lore goes that if you find yourself face-to-face with a bear (for some reason), the only thing you can do is play dead (this is not a survival camp; so don’t take this advice out of investing space).

So, what can investors do during a bear market?

Play dead!

This means, do nothing.

Don’t panic sell. You only lose if you sell.

What you can do, instead, is buy. Dollar-cost-averaging is when you bring your average cost down by buying at lower prices.

It might seem foolish to buy now. But remember that everything is cyclical?

What goes down, must come up.

Special warning for crypto lovers

The stock market and its constituent companies can be considered relatively safer to recover when a bear market is done. Because their fundamentals are strong. They have a real utility that can attract customers despite what their share prices do.

But what about crypto holders?

The same reasoning behind stocks applies to cryptocurrencies.

If a certain cryptocurrency/project/protocol has real utility (even within the crypto space), it has a higher chance of surviving and emerging victorious when the bear market turns to a bull.

It takes some strong fundamentals and a community for a crypto project to survive a bear market. So, make sure your hard-earned money is invested in such protocols.

Investor’s psychology

Look at the below graphic that shows how investors’ psychology works.

Psychology of Market Cycle (Image: wallstcheatsheet.com)

Notice that the line graph does not end from left to right. It’s rather a continuous cycle.

Those who buy now, during the depression or disbelief period, will be greatly rewarded during the Euphoria stage (hence, the term euphoria).

Remember to take out some profits when you enter the euphoria stage and compound the rest during all the other stages.

Conclusion

Do not fear the bear! Do not attempt to run! Do not panic sell at a loss! Just do nothing if you can’t buy more.

Patience is the name of the game right now, and be prepared to see -60% or more in some investments.

But things will bounce back, and those who had the guts to hold now, will be rewarded later.

So, what will you be doing during this bear season? Drop a comment below.