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4) How to survive your first Crypto Bear Market.
🕑 Added 2022-11-29 20:47:24 +0000 UTCThis has been HIGHLY requested. So forget about the introduction. Let's get straight into it.
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As this crypto bear market deepens, expect an INCREASE in the amount of "fear, uncertainty, and doubt" (FUD).
You will see more collapse of projects or fear in stable coins, which will all EQUATE to one thing:
MORE PEOPLE WILL LEAVE.
The chart below shows the search for crypto on google. The interest has DIED DOWN a lot, whilst it peaked during the bull run.
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This can be quite scary and shocking for NEW market participants.
Especially as the previous year, you heard about how everyone was MAKING MONEY and all markets were just going up.
You had taxi drivers talking about their crypto portfolio and everyone gossiping about Safemoon.
Now compared to this year, all we have seen this year is nothing but a DECLINE.
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What is a crypto bear market?
A bear market is a long period of a DOWNTREND, lower lows, and lower highs.
In traditional markets, this usually starts from 20%.
But as crypto is more VOLATILE we can say a 40% decline trend.
This usually happens after parabolic moves of unsustainable GROWTH.
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Now many people associate this growth due to the BITCOIN HALVING EVENT.
Bitcoin halving is when the reward for mining Bitcoin transactions is cut in half.
This causes an INCREASE in prices for bitcoin due to reduced supply and surging demand.
The halving event happens EVERY 4 YEARS, which is where the bull and bear terms come from.
Now even though many people believe this, I believe it's a LATE INDICATOR as the price most times has already bottomed BEFORE this halving event.
But still, something to keep your eyes on.
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2022 BEAR MARKET
Understand that every bear market is SIMILAR and UNIQUE in its own way.
Let me explain.
In 2017, we had Warren Buffet being the face of crypto with influence over the market.
And in 2022, it's Elon musk and Michael Saylor the face of crypto.
In 2017, we had south Korea rumouring that it would ban bitcoin which caused the price to fall.
And in 2022, it is China banning bitcoin which also caused the price to fall.
Here's what 2017 looked like:
- 17 December 2017: Bitcoin's price reached a new all-time high of $19,800.
- 12 January 2018: Rumours that South Korea could be preparing to ban trading in cryptocurrency, caused the price to fall
- 26 January 2018: Coincheck, Japan's largest cryptocurrency OTC market, was hacked.
You see the SIMILARITIES.
The same hacks and fear spreading on headlines today, also happened in 2017.
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But this time what's going on?
Central Banks started to INCREASE interest rates while DECREASING the printing of money.
This was NEGATIVE for stocks and crypto markets as investors now have LESS MONEY to invest.
Also, projects that had taken on TOO MUCH RISK became EVIDENT as cryptocurrency values continued to FALL.
Hedge funds and lending platforms were exposed to over leveraged positions when the Terra ecosystem failed.
We have seen the collapse of huge companies such as FTX, which collapsed for being insolvent (no liquid user funds)
This resulted in forced selling left and right which caused prices to DROP by more than 50%.
This is all needed for the next bull run, the fear will always be here in bear markets as that is what gets rid of new participants.
So how do we get to pass this stage...
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Focus on your Psychological mind.
You might think you are FINE and that you just want to make the money YOU LOST back.
But that's where the PROBLEM is.
Revenge trading is never the solution.
If you took some significant losses in your portfolio and all you remember is when you were at an ALL-TIME HIGH, it is UNDERSTANDABLE that you feel awful.
But there is NO BENEFIT in being all emotional. Just a waste of time.
Grief has five stages:
- Denial
- Anger
- Bargaining
- Depression
- Acceptance
Realise what stage you are on.
Once you come to the ACCEPTANCE STAGE you will see CLEARLY.
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What you have to REALISE is that:
Cryptocurrency will be around forever. In five or ten years it will be MORE PROMINENT than it is now.
So It’s worthwhile that you STAY and INVEST.
And when is a better opportunity to accomplish that than a bear market?
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Only invest in what you can AFFORD to lose.
I'm sure you're aware of how many times you've heard this.
But what does this ACTUALLY mean?
The amount should be enough to NOT make you lose sleep over it or panic sell at the bottom if the market collapses.
The amount should NOT play with your MIND.
Surviving is a psychological game.
Before you deposit USDT into your exchange be HONEST with yourself.
Whatever amount you deposit, write it off to zero. Believe that money has gone already. Do not count that as a part of your net worth.
Why?
In the event that it actually reached zero, could you handle that?
If you can, then your chances of LONG-TERM SURVIVAL are very good.
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Dollar-Cost Average.
The truth is that 95% will NOT CALL THE BOTTOM.
This is not a reliable strategy to depend on someone.
They DID NOT call the TOP of the cycle when bitcoin was at $69k, so what makes you think that they call will the bottom?
But I did and I did it publicly.
Now I'm not saying I will 100% call the bottom, but I WILL TRY MY BEST.
(I will do a post on what indicators I look at to show you soon.)
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People think that FOMO is only when price is pumping, WRONG.
FOMO of missing the bottom is also real.
But DCA is arguably the best way to enter.
If you have already decided to get involved with a certain crypto project,
using DCA is the best way to minimize the risks involved. DCA is:
systematically investing equal amounts of money at regular times, regardless of the price.
Doing that can enable you to safely distribute your budget and beat FOMO.
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Review your portfolio.
Just because it is a bear market DOESNT MEAN you buy everything and anything.
You have to be very STRATEGIC.
Sometimes buying crypto at low prices doesn’t translate to PROFIT.
The reality is that 90% of crypto will never actually reach an all-time high again.
Developers often leave projects during the crypto bear market as the project struggles to survive.
Now is the time to look at the projects and see if they are still building during this climate.
Are they updating the community on their progress on twitter?
Are they still following their roadmap and achieving their target?
If not chances are they have left the project and you dont want to be holding a dead bag during the next bull run.
Do stuff outside of Crypto.
I know people who had good lives and hobbies but slowly LOST THEM due to Crypto.
They couldn’t take their eyes off the charts and couldn’t relax.
Make sure that this is NOT YOU.
If you wake up every morning and the first thing you do is check the prices.
RELAX. WORK ON IT.
Draw your levels on a High time frame and WAIT for prices to reach YOUR DESIRED LEVEL.
Be in control, don't let the markets control you.
Furthermore, the more you look at prices, the more likely you are to make STUPID DECISIONS that were not part of your strategy.
Have a life outside of crypto, work out and really look after your health.
STEP AWAY for a second from Crypto Twitter and engage with your friends and family.
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Prepare yourself in a Bear Market.
The time now is for building.
Money is made during a bull run whilst WEALTH is made during a bear market.
During bear markets, many Crypto projects start to focus on what actually counts.
As during a bull run, they get a huge influx of short-term community members just asking about price targets.
But during this time the excitement has subsided, and they can focus on improving their products with the long-term community members.
What could you possibly do?
Educate yourself about Crypto principles, finance, and specific market sectors such as NFTs or play 2 earn.
Invest in the future such as Privacy coins.
Not based on today.
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Believe in the LONG-TERM potential of blockchain and crypto.
remember that prices ALWAYS go UP and DOWN, but as long as fundamentals stay the same, don't worry.
ACCEPT where you are TODAY and LEARN from your prior cycle’s behaviour.
Understand yourself.
Make a plan and stick to it based on certain circumstances you may imagine.
Meanwhile, focus on your crypto skills and your life outside of Crypto.
There is, in fact, one!
And if this is your first, then realise it’s completely normal to lose your first bull/bear run.
All of the winners who profited LOST IN 2017 and will tell you the same.
@ionicXBT
Comments
Wow amazing!
Beautiful, notes taken 📝 💪
