The Bitcoin community is a vast space where traders and investors alike talk about what goes on in the market. Newcomers and veterans both visit these online communities to stay updated and get news about the next big thing.
These days though, you can expect to hear a lot about the bear market that’s affecting Bitcoin. For the uninitiated, the bear market might be a little confusing, more so if you don’t know what to do when you’re in one.
Defining the bear market
What is a bear market? By definition, a bear market is when the value of a (previously) growing asset suddenly plummets and stays low for an extended period of time.
The reason people are saying that Bitcoin is in a bear market this time around can be understood when you look at the all-time highs and how BTC had been steadily growing. Earlier this year, BTC’s value would then start losing value as more and more investors grew fearful for their money.
Things you can do in a bear market
Some might make a mistake in assuming that there’s nothing for you to do in a bear market. Luckily, you have a few opportunities where you can secure and even improve on your initial investment.
Holding on for dear life, or HODL as it’s become popularly known is one strategy that you can follow during these bear markets. It follows the idea that if the value had been high before, it’s bound to recover the same or possibly more in the future. It’s not as easy as it sounds though, with the most extreme HODLers disregarding all large price swings—to them, it’s all part of the risk.
That’s not to say that you shouldn’t be doing anything at this time. Keep an eye on the market and look out for signs that the time to HODL is over.
Don’t give in to peer pressure
Where before the only problem for newcomers was figuring out how to buy Bitcoin with credit cards, nowadays the problem lies more in sifting through the different content, articles, and opinion pieces all trying to predict what the market will do next.
When we consider the fact that Bitcoin is still a new currency, we can understand how people might make wrong assumptions about how it behaves. That said, don’t let others decide for you. During a bear run, of all times, you’ll want to be confident about your trading decisions.
Alternatively, you could follow the examples of others and simply cash out your investment. The reasoning behind this is to minimize the losses you might see if you hold on to your BTC for too long.
To recover losses and get back into the market, people can then use cost averaging techniques to buy BTC over time. It might take a while to recover your previous gains, but if you can cash out early enough you can avoid the worst of the drop.
Take advantage of the situation
If you’ve done any preliminary research, you might have noticed how the basic idea is to make money with Bitcoin during the dip. It’s reasonable, after all, to simply wait until the value reaches a low enough level before you buy in, letting your investment grow over time.
Should the value of BTC plummet, you may find yourself in a favorable situation if you have the money to invest. You can even use tools like the fear and greed index if you need a little help reading market sentiments.
Avoid FUD by staying updated
During these bear markets, the online Bitcoin communities will probably be filled with opinions from traders and investors. This isn’t to say that everything they’re saying is wrong, but we have to take into account that no one can really guess where the market might go in the future.
This is where FUD comes in. It’s an acronym for fear, uncertainty, and doubt and it perfectly describes what a lot of people might be feeling at the moment. The best way to keep yourself safe from this is by making sure that you stay up to date on the latest news. Being well-informed is the best way to make sure you can make the best decisions.
Making the most out of your investment
Investing, whether it be Bitcoin or traditional assets, can be a nerve-wracking experience. When the market becomes a little murky, it’s better to focus on steps that you can actually take, to lessen the anxiety that may come when values drop.
The Bitcoin market is a vast world where you can make money. All you have to do is make sure you stock up on reliable information before anything else.
*The content of this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.