Investing during a bear market or when the market is uncertain can be difficult. This is because it’s hard to predict in which direction the market is heading – and how much you should invest and where. When things are uncertain in the cryptocurrency market, it makes it tricky to try and decide which projects to put your money behind.
Some projects like Bitcoin and Ethereum are established and will regain value when the bull market rallies. Other projects, however, that are still starting and developing rely on funding to continue building. As a result, many projects suffer during a bear run to the point where they cannot continue operating. This makes it difficult to know which projects are worth putting investment behind. Even experts aren’t able to predict where the market is heading and projects will thrive when the industry rallies again.
There are a few strategies you can undertake to invest in crypto during a bear market, depending on your risk appetite.
A varied crypto portfolio
Experts suggest that you should try have a few different assets, building a portfolio of both emerging and established cryptocurrencies. Having coins like Bitcoin and Ethererum, as well as stablecoins, set traders up to enjoy the rewards from a varied portfolio when the market turns. Having only one cryptocurrency in your portfolio is risky, should that project suffer during the bear market.
Watch the price of Bitcoin
Another strategy that investors could take is to follow cryptocurrency coins that closely follow the price volatility of Bitcoin. Often coins will follow Bitcoin’s trend with a slight delay. If a project has a history of following Bitcoin’s trend, you might be able to trade in a way that you can take advantage of this acting before the project price moves.
The riskier side of this is that less well-known projects are more volatile than Bitcoin and the movements might be a lot more aggressive, which could lead to a short fall in the market takes a downturn before you can catch it.
Stay updated with regulation and news
Part of cryptocurrency investment is making sure you are as equipped with information as possible. Trading with deep insight can give you the upper hand in the industry. Staying up to date with regulation and market news – whether related to key shareholder figures in market overall or project developers – means you are able to time the market as best you can. The more you know, the better you’ll be able to act. If you need to adjust your portfolio, it helps to have the news and information readily available.
It’s worth noting, however, that you should avoid trading emotionally. If you have chosen a strategy, stick to it as much as possible. While it might be tempting to sell if the market takes a dip, it might be worth holding on (especially if this was your strategy) and staying calm. When the market picks up again and you’ve sold your cryptocurrency, it will be frustrating to calculate how much crypto is valued at down the line.