As cryptopreneurs, it is important that we always keep in mind, the fact that cryptocurrency markets operates in cycles. Crypto market could either be in a bullish season or in a bearish trend. These are already established facts so, when any of them shows up, you shouldn't be too surprised or taken unawares. It is the understanding of this that helps you hope for the best while also preparing for the worst.
However, some persons only want the green days and never want to see the red days in the market. Truth is, markets don't pump forever and neither does it dump forever. After a market pump, there will always be a dump and vice versa. It's your duty as a trader/ investor to know how best to react to every market condition.
Last year, we saw a lot of greens in the market as majority of cryptos gained massively and some did hit all-time highs. Bitcoin who has always been leading the way got to reach a new all-time high same with Ethereum and even Hive. For those who bought while prices were down, this is a good run for them. Also, the market pump did in a way get people's attention to invest and adopt crypto. However, the pump happens to be over for the time being as we have seen a lot of price retracements in different cryptos.
Preparing For The Bears
Can we say that we are in the bear market? Maybe Yes or maybe no; I'll leave you to answer that. Whatever the case, I'd like to point out that bear markets do surface and one needs to be prepared for it. Briefly, we will be discussing on ways that we can get ourselves prepared for bear markets.
When we say bear market, it is referring to a season in the market when prices are lowering instead of increasing. It is the season where crypto prices hit lower lows and people's portfolios see huge declines. It is a season that some persons do not want to see but it is needed for the market to be termed healthy.
Take and Keep Profits: It appears that during market pumps, a lot of persons get greedy while some are indecisive and confused about whether to or not take profits. Knowing that cryptocurrency is associated with a high volatility is enough for one to learn the art of taking profits and also keeping them.
No one can teach you how to take profits; only you can educate yourself on that. Yes, it's true that we talk about hodling your investments but taking profits is also necessary in my own opinion. Hodling everything even when there's a massive pump and not selling at all might result in regrets. Likewise, selling everything and hodling none is not wisdom. A balance needs to be struck and this is where your knowledge about business and investments is usually being tested.
More so, there's a lot of greed in the market. People want all their investments to result in 100x, 500x or 1000x all of the time. Because of this, they fail to take out reasonable profits and then a dump happens right before their eyes. I know that it is a very complicated situation but in order that we prepare against bear markets, it is pertinent that we take out some profits during the bull runs and keep them as an hedge.
Buy Stablecoins: In line with taking profits, it's best we store up our profits in currencies that are stable to avoid value depreciation. This is where stablecoins come in handy. We have a lot of stablecoins out there but care should be taken when choosing which one to buy into. Learning how to save or keep profits is a great way to prepare against bearish seasons. Many people make profits but keep very little.
Maximizing Bear Markets
When we do all of these, it helps us to take advantage of the bear markets instead of suffering as a result of bear markets. Having liquidity in the face of crashes allows you to make maximize the opportunity. The best time to invest is during dips or crashes and not during the bull run.
In essence, bear markets brings to us opportunities and only those who prepare for it get to benefit from bear markets. While enjoying the green days, always manage your risks, control your greed and prepare yourself fully to take advantage of any subsequent crash.