4 Strategies for Surviving a Crypto Bear Market
There's no need to fear a bear market, as long you're prepared.
A bear market is a time when the prices of assets, such as crypto, stocks or property, go down by at least 20%. It's not a good time and it can be dangerous so it’s important investors use these times wisely by following certain strategies that will help them stay calm while the crypto market takes its toll on portfolios.
Investors use the opportunity of a bear market to review their strategies and fine-tune them for any potential issues that may arise. In this article, we'll walk you through four strategies and mindsets that can help keep you safe during bear markets - even if the economy isn't feeling so good!
Accumulating with dollar-cost averaging
The number one thing to remember during times of slowdown is that it’s normal for markets to have negative years - it’s all part of the cycle. If you’re an investor looking to play the long game, then one option is to leverage dollar-cost averaging. Purchasing assets regardless of their price over a long period of time often means you also end up buying assets at a low price when the market is down. Over the long run, your overall cost will average out and leave you with a better overall price for your assets.
Your asset allocation strategy should be tailored to your needs and preferences. In order to not risk losing everything in one basket, it's important that you have a diversified portfolio with investments ranging from crypto, commodities, stocks, bonds or cash, depending on what’s best for achieving your goals over time.
Invest only what you can afford to loose
Investing is important, but so are your groceries and mortgage. It's unwise to take short-term funds (i.e. money for the house) in order to invest them into the markets. Bear markets are an undeniable part of investing and can be extremely destructive, even minor corrections may affect your investments deeply!
Look for value
Bear markets can be great opportunities for investors. The secret is to know what you’re looking for. When stocks are in a bear market, they become beat up and can get priced below what people think their true worth is. This is where investors like Warren Buffet look for opportunities to build up a position of their favourite asset in less-than-cheery times because they know the market’s nature.
When it comes to investing, these are just a few key principles to keep in mind. By knowing these simple strategies, you can help ensure your success as a smart investor.
For more information on how to get started in the world of crypto, be sure to check out our learning hub. There, you will find detailed guides and tutorials on everything from crypto market basics to advanced trading strategies.
Disclaimer: Information provided is for educational purposes and does not constitute financial advice or investment strategy. You should obtain independent advice from an Australian financial services licensee before making any financial decisions.