Crypto is young. It has yet to settle into the same level of monotony and mundanity of more traditional markets.
And, to be honest, this is a huge part of the draw. You can find the wild stories of untold gains of Bull markets.
But, the flip side of that is when the market turns. Before you get too unsettled, this is the landscape of investing. It also happens in traditional markets, just with a much more regulated pace.
- 🐂 A Bull market is when securities or investments are on the rise. Basically, this is when your coins are 🚀
- 🐻 A Bear market occurs when securities or investments fall, typically more than 20% from their most recent peak, and often for a sustained period of time.
And, as the crypto space has been finding its footing it has grown consistently over time, both in terms of value and the number of people who are drawn to the new opportunities offered by blockchain technology.
Overall crypto market cap per week, July 2010 to May 2022 (in billion USD)
Before we get going, though, this article is meant to help newcomers understand the space and the cycles that we still feel. It is NOT investment advice.
Not All Bad
Bear markets can hit hard. That's completely true, but we've also seen over time that while Bull markets spur everyone into a mania of high growth, the Bear markets are when people and projects take a moment to slow down, reflect, regroup, and often serves as a time for some of the best projects to really push to the top.
In the past, this has been when the space as a whole matured, leaving the best projects that were committed to providing real value…not just the ones who found a gimmick and quick buck to take them to the moon.
Basically, Bear markets are the time to strategize, build, and get better. So…if you're looking for a bit of self-improvement while you're waiting for the market to explode again, check out some of our courses that will get you ready for a steady flow of income in the space, from your Web3 career. Which is another great tip from personal experience, a steady income can really make the market swings less related to your immediate stress levels.
The other good news is there are some things you can do to make life a bit easier in terms of your portfolio when a Bear market does hit.
To lay some basic ground rules though, no matter how high the highs of a Bull market are, never invest more than you can afford to lose. Set some realistic boundaries for yourself so you never end up in a situation that feels too dire.
But, other than that, here are a few tips. Check them out, but take into account your own situation, and make sure to tailor any investing principles you'll build to your specific needs and circumstances. This article is, again, not intended as investment advice.
Move away from risky alt-coins
A lot of crypto projects and coins have very little behind them when you start digging. These are the types of projects that tend to drop off during Bear markets. If you hold some alt coins, take a look at the project. Do you think it has real value to offer? They might be worth holding onto in the off chance they make it to the next Bull market.
If not, usually the only thing you can really do is cut your losses and avoid them in the future. Because while fun meme coins can be a fun way to make a quick buck in a Bull market, when there's less money to spread around, they aren't the coins you want to be stuck with.
Revisit your goals and risk tolerance
This goes with the above advice, but it's easy to get carried away by the excitement of a Bull market. So, take some time to reflect.
Look at the choices that you made in the past, and what you were evaluating your investments based on….did those pan out, or do you need to adjust your criteria going forward?
And, even though it might be too late to buy into Bitcoin and make millions, Bitcoin has proven to be a safer investment than many other coins…to the point that some of the Wall St. kids, like JP Morgan, got involved. There are arguments that Eth is an even safer bet than Bitcoin, but none-the-less, it's worth looking into the more stable options on the market, rather than aiming to be the one-in-a-million to find the gem.
Don't be easily wooed by huge APRs
Large APRs are great, but there's only so much 200% APR can do if the token's value takes a 90% dip. Take a look at the actual returns that you'll be making.
Instead, take a look around for who is still putting work into their community who might be investing in long-term growth. And maybe take the chance to get involved with the work if you have the time. Take your time to slow down and learn.
Avoid knee-jerk reactions
AKA, hodl. Now, this one might seem at odds with the first piece of advice. But, take a moment to actually think about your current portfolio. When you look at all of the coins you have, are they based in strong projects? Then take a moment to decide if selling off or keeping them around is right.
This piece of advice might go for everyone, but if you're really new to the space, I would encourage you to take a look at the following. Even veterans get burned, but having some experience with this and the right knowledge to evaluate a project can really help.
Or as Cat McGee, a 6 to 7 year crypto investing veteran, told me:
"Bears are about surviving and preparing for the Bull. You can make money in a Bear, but this is risky. 'To beat the Bear, you have to think like the Bear.'
"Hold, diversify, DYOR, and don't get cocky just because you did well in a Bull. Spend time to become a well-versed crypto user, not just an investor, to go into the Bull with your new knowledge."
On the bright side, in crypto, when we're in it, we're usually in it together. That can mean communities will be filled with more FUD than normal. Take that with a grain of salt. But, beyond that, it also means that you'll often find someone in a similar position, or at least ready to listen.
On that note, if you need to talk to someone, we're around Discord, and dms are always open.
And, if you’re looking for more resources, feel free to check out the following:
- Surviving Crypto Cycles
- 7 Keys to Getting through a Prolonged Market Downturn
- Surviving Bear Market
- 20 Tips to Survive the Crypto Bear Market
✨ Have any experiences to share or want to learn more? Join our Discord to talk now, or contribute directly to the Third Academy Library by applying to be a contributor below!✨
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