Crypto Bear Market: Here are 4 Investment Tips

The recent crypto crash has been nerve-wracking for crypto traders and investors. However, don’t just give up. Here are some amazing solutions that will help you stay above water and make the most of the crypto bear market. 

Last month, Bitcoin went down as low as $20,000 which bought double-digit percentage losses. It has been the lowest since November 2020. Other financial markets are also in a similar situation, which has made investors concerned about their undertakings. Usually, these situations can make investors run away from the financial market. However, after thorough research, here are the top four things that one must do to make the most of the bear market situation. 

Use Dollar Cost Averaging to Buy The Crypto Dip

Since the crypto market is volatile, it can be very easy to choose the wrong side of the market. However, a bear market doesn’t always mean that traders will just sit and watch their investment go down every hour. 

Investors who have a reserve of stable coins or fiat currency and have enough capital in their bank accounts can buy the dip or a substantial amount of cryptocurrency when the market is bearish.  The idea is to buy the dip when the price goes down as they can get a huge return when the prices rise back high.

Investment guru Warren Buffet once said, to buy the stock when there is blood on the streets. While one single trade can buy the dip the best strategy is to enforce something known as dollar-cost averaging. Dollar-cost averaging is the process of investing a fixed amount of dollars every day irrespective of its market price.

This helps in breaking up the available funds into smaller tranches and makes several exchanges over some time. Assume the available capital is a thousand dollars. DCA can be used to break the amount into five or ten transactions and trade using small amounts.

Since it’s impossible to recognise when an asset reaches its lowest, rather than spending the entire amount at once, one can buy small amounts to see if the price falls further. If it does fall, one can buy more and continue doing so. This will help to get better results than a single trade.

Also Read: The Central African Republic Launches its Sango Crypto Hub

Look For Indicators To Find The Best Entry Period

Any investor with prior knowledge of technical analysis can use indicators by studying price movements, indicators, patterns and chart trends. This will help them to comprehend when the indicators extend to reach the bottom.  Although no such indicator is infallible, they can provide a strong signal as to when to buy the dip.

The RSI or Relative Strength Index indicator is a popular method featuring a momentum oscillator depicted by channels and the line moves in and out of that. The two main components of the tools are oversold and overbought. When the line breaks out beneath the channel the asset is said to be undervalued or oversold. This shows that the prices will soon rise again. When the line breaks out above the channel, the asset is said to be overbought or overvalued and indicated the price to fall short.

Although these two signals can be used alone, sometimes these can be falsely predicted, especially in time frames like four-hourly or thirty-minute options. Therefore, it is best to apply the RSI divergence strategy. Another crucial point about RSI is that it follows a similar pattern to the asset’s price. For example, if an asset price falls, the indicator line also falls. However, often these two lines move in opposite directions known as RSI divergence and indicate the beginning of a reverse trend.

Also Read: Blockchain Analytics Play An Important Role For The Growth of the Global Cryptosphere

Circulate investments across numerous crypto assets

It is near impossible to accurately foresee the end of a near market and difficult to understand which crypto among seventeen thousand are going to recover faster. Although one of the best ways to do that is by using the DCA procedure with a variety of crypto assets. It helps to trade in small sizes and it will help to reduce the widespread risk. It is important not to randomly select the crypto assets for DCS, and one needs to look for various factors in each crypto before choosing the ones for investment. Here are some of the top points to look for- 

• All-time high
• Previous performance
• New announcements

Do Not Panic!

It is hard to see investments underwater, especially when the market reflects a bearish situation. However, it is important to keep calm during trying times. American economist Benjamin Graham asserts people who do not know how to control their emotions are not suited to gain profit from the investment business.

Therefore, it is important to understand that freedom and fear, although powerful tools for inspiration, if not mastered can cloud judgment. Having a concrete plan before trading is crucial as it will set the loss or profit for you. Over expectations can become detract investment values, as many individuals keep the asset in the hope to gain higher profits. This might risk the trade and individuals may face huge losses.

Wrapping Up

The crypto market is no doubt volatile. It frustrates the investors when they miss the opportunity to buy the dip. Experts suggest the crypto community might face the red candle down for this year but might discern a hike by the end of the year. The above tips will help to seize profits even during the crash and ensure to save up some capital to survive the bear market scenario.