[Editor’s Note: This article was first published on January 27, 2022, and was edited and updated to reflect the current crypto market situation as of 13 May 2022.]

This week has been a crazy one for crypto. Luna’s price fell over 100% in the past 24 hours, and is now US$0.00002843, a far cry from its all-time high of US$119.

Luna and UST trading pairs have also been delisted from most major crypto exchanges, including Crypto.com, Binance, Etoro and ByBit.

To add on, the Terra blockchain was also officially halted at Block 7607789.

This has led to a frenzy in the crypto space, and other cryptocurrencies are also trending downward.

The current Bitcoin price is 55.6% short on its all time high of US$69,000 November last year, while Ethereum also broke its key support level of US$1,800 yesterday (May 12).

We are in the bear market, no questions about that. But what is the time frame for this bear market, and how long will we be kept in the cold? If you invested in crypto in 2021, chances are your portfolio will be looking just like mine, definitely bleeding and in the red.

Extreme fear in the crypto market

The Fear & Greed Index analyses emotions and sentiments from different sources and compiles them into one simple number. Currently, the Fear & Greed index for Bitcoin and large cryptocurrencies sits in “extreme fear” at 10 points.

Surviving the bear market

One way to survive the bear market is to follow the thread above on technical analysis in profiting during the bear market.

1. Preparing a strong stomach

To survive the bear market, the first thing we need to ask ourselves is — “is crypto here to stay?”.

Crypto provides a new way for wealth to be distributed to all stakeholders. NFTs for artists, gamers who are able to earn tokens in games, and many DeFi protocols which enable you to build your own ‘financial institution’.

If you take a zoomed out look at the chart of Bitcoin, you will see that holding will get you somewhere. However, the problem is people tend to be very afraid when it comes to dips, causing a pit in their stomach when prices go down.

On one spectrum, crypto provides the opportunity to be able to 2-5x your investment in a short period of time. However that would mean these assets could plunge 40-50% at any given time and you must be able to stomach that.

The nuance to all of this is that you have to be invested in the right projects, which you have to research on and not view crypto just like a quick cash grab.

2. You can’t time the markets, DCA down

Though tempting, trying to time the market is a loser’s game. $10,000 continuously invested in the market over the past 20 years grew more than $48,000. If you missed the best 30 days, your investment was reduced to $9,900.

Christopher Davis

The vast majority of new investors would think of timing the market. Buying high and selling low, simple as that.

Whenever I try to do that, it simply doesn’t work. Unless you are super skilled with a ton of resource and experience to do so. Timing the market might exposes yourself to potential poor investment decisions, instead I take a dollar cost averaging down approach in the bear market.

3. When to buy and sell

Buy

Mindset is super important especially in how volatile the crypto market is. You almost have to trick yourself into thinking dips are opportunities for discounted buying opportunities.

Great investors make millions in the bear markets — it is important to have a positive mindset during these times and invest in good projects which have stand the test of time.

In the long run, positions you have made when ‘the market is fearful’ would provide more upside during the bull run.

Sell

So when do we sell? If your investment thesis have changed. When new risks are introduced, or when there are new projects which provide better utility, it would be a good time to sell when it makes your current investment less attractive.

Also, opportunity cost. If you see a better opportunity in providing higher gains or reducing risk, it would be time to jump the boat.

What I do on a weekly/monthly basis (or when I have the time) is to review my portfolio and rank my positions based on the highest returns and risk. This does not necessarily mean my portfolio changes every week but it makes me think about any changes and allocations I should make based on the current climate/narrative.

Closing Thoughts

Everyone has the brain power to make money in stocks. Not everyone has the stomach.

Peter Lynch

In the grand scheme of things, (NFA) I believe cryptocurrency is here to stay for the long term. We are definitely in the bear market but you will never meet new ATHs without going on a rollercoaster ride. Lets admit that crypto is highly, almost dangerously, volatile and you really need to have the stomach to see through lows.

For a long time coming, I found it most difficult to accept that I cant time the market, and really I always never get it right. Instead, dollar cost averaging down in great projects which gives me a stronger stomach. Bear markets also provides a huge opportunities and look forward in buying the dips.

I think it is important to have a good psychology when investing in this space. Things may go even south, but I also believe there would be a rebound at some point of time, which will come even stronger. Keep that long term mindset at the back of your head and enjoy picking up projects at a huge discount.

[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]

Featured Image Credit: Chain Debrief

Also Read: Is This Time Really Different? Lessons And Warnings From Previous Crypto Bear Markets