Lead image: Unsplash
Rrrrr...I hear a bear, do you?
...
INTRODUCTION
The phrase 'bear market' is obviously not one that could be termed as 'unfamiliar' as far as the crypto space is concerned. Earlier this year 2021, we've seen appreciation in the prices of various individual crypto assets- most coins even attained major All-time-highs.
However, as of the time of writing this article...It is no doubt that the reverse is the case. As basically all major crypto assets are currently experiencing noticeable price corrections. What then can we call this? Why is it happening? What can you do?...
WHAT IS A BEAR MARKET?
In the crypto space, a bear market can basically be defined as a period or phase of the crypto markets that is usually characterized by a massive decline in the prices of crypto assets. As introduced earlier, it is that period in which there is a noticeable general decrease in the prices of crypto assets due to various market corrections.
As opposed to a crypto bull market- where there is a massive general increase in the prices of crypto assets and making profits is a normal thing, in a bear market, the ability for you to make profits would be highly dependent on the skills you possess and how well you can leverage on them as well as various strategies you choose to apply.
A thing that the bear and bull markets have in common though, is the fact that they usually tend to happen over a somewhat prolonged duration of time.
And yeah, the bulls love the greens...the bears enjoy the reds!
WHAT CAUSES A BEAR MARKET?
Of course, this is one most likely question that must have one way or the other, popped into your head. What are the causes of a bear market?
Oh well... while there's a various number of factors that could contribute to the initiation of a bear market, it should be noted that the crypto market revolves around the concept of money. And thus, the most straightforward way to make from crypto is by selling appreciated assets.
However, when there is a situation of massive sells compared to buys of crypto assets for various particular reasons, the overall market just tends to crash.
There are quite a handful of reasons why bear markets occur, ranging from various negative investor sentiments, political conflicts, shifts in consumer activity, changes in inflation rates, as well as even general disease outbreaks affecting the world (as seen in 2020 with the major outbreak of the COVID19 pandemic).
HOW LONG DO BEAR MARKETS LAST?
Now, the duration of a bear market is usually dependent on the initiating cause in most cases. And thus, in cases of temporary and short-lived scenarios, a bear market could barely last for weeks. While in much-complicated/ adverse situations, it could spread across months or worst still...years!
WHAT TO DO IN A BEAR MARKET
A couple of things that could actually help you survive a bear market include;
Take a break: Yes, it's all red so...take some time to rest! Might sound weird but, once in a while even taking a break could be a really good way to manage mental health and the stress of having to worry about the decline in your portfolio value.
'Buy the dip': The art of 'buying the dips' is one that could really come in handy during bear markets especially when you are looking into long-term investments or you are just investing in a particular cryptocurrency for the first time- Catching it for a cheap price could be something witty to do.
However, it should be noted that, as it is not always certain that a final bottom can be determined in a bear market...when you buy low, it could dip further. Whichever way, be prepared to hold!Embrace stablecoins: Okay, this could be likened as more of a precaution to take. It could just save you from having to sell your volatile assets at loss in cases of urgent need for you to convert to fiat currency or even to buy dips.
Go for shorts!: This is especially useful if you trade futures contracts. A bear market provides room for you to make money if you can find a way to leverage on very brief candlestick price rallies. C'mon...short 'em!
CLOSING THOUGHTS
All these said...The market conditions will always change. Thus, just as bulls dominate when it's time, the bears would also do the same when it's time as well. And your ability to leverage each situation appropriately is what could give you an edge overall to make profits.
Thank you for taking the time to read this. Kindly lemme know your thoughts in the comments section! :)
