The price of BTC has fallen nearly 82% from all-time highs (so far). ETH has taken an even bigger hit. Most altcoins are looking at 90%+ collapses from their respective all-time highs. Yes, crypto is most certainly in the throes of a bear market.
Bear markets aren’t particularly fun — unless you happen to short the top, in which case you’re probably having a great time. For the rest of the retail traders and investors still here, there are some viable strategies to weather the blizzards of Crypto Winter.
Here are some of the best ways to survive the crypto bear market.
Assess your situation
Before you can begin to make moves to survive (or even profit from) a crypto bear market, a trader or investor must assess their current situation — namely, what do you have right now.
Don’t focus on how much you lost already. Don’t focus on how much unrealized profit you left on the table. Don’t focus on what your portfolio was at an all-time high. Don’t focus on those top-purchases you made when everyone was feeling euphoric FOMO.
Take stock of your current portfolio and decide what you want to keep and what may never see higher prices again. For example, BTC will almost certainly perform the best — generally speaking — in a bear market.
As much as you might love that profile-picture nonfungible token or that governance token that once yielded you a gazillion percent APY on some OlympusDAO fork, it might be smartest to take the L and consolidate into BTC or top-tier altcoins.
Stablecoins are also a viable option — though not all stablecoins are created equal. Industry leaders USDT and USDC are generally considered the safest, but DAI also exists for those that value decentralization. Just don’t get blown up on some algorithmic stablecoin Ponzi.
Tl;dr: Consolidate your portfolio into crypto assets with less risk and/or stablecoins.
Assess the overall situation
Once you have an understanding of where you stand, portfolio-wise, the next step is to… well… step back. Zoom out for a minute and take a look at the overall global macroeconomic picture.
As much as we might not like it, the crypto market is still largely correlated to the traditional stock market. When stocks go up, crypto goes up. When stocks go down, crypto goes down. This might seem overly simplistic, but it’s objectively true.
With this truth in mind, one should examine what factors are currently affecting traditional markets. Did the United States Federal Reserve just raise interest rates again? Did Fed Chair Jerome Powell just state the U.S. may fall into a recession? How long is debt expected to remain expensive? What geopolitical factors — such as military conflicts — are, or may soon be, underway?
It’s important to understand the big picture — primarily, the global economic outlook — in order to assess when a bear market may end. However, one mustn’t forget that Bitcoin was largely created to be a hedge against all of this via its mathematical scarcity and trustless, decentralized nature. Nevertheless, the price of BTC is dictated by buyers and sellers, and remains closely related to stock prices.
Don’t try to catch a knife
The industry loves to tell you to “buy the dip,” but anyone who’s been around for at least one crypto bear market will tell you that the dip can always dip again. Just because you’re buying the dip doesn’t mean you’re buying the last dip.
When prices are collapsing, one might be tempted to think they are being clever by trading against the herd and buying ETH’s 11th-straight weekly red candle — but this is called “catching a knife.” As the phrase implies, there is a chance you might cut yourself and end up bleeding. There is a smaller chance you will actually time the bottom perfectly, instantly finding yourself in a profitable position.
Catching proverbial knives is even less of a good idea when using leverage, as poorly timing your buy could see your position liquidated rather quickly.
Instead of knife catching, try a more calm and collected approach…
Dollar-cost averaging ftw
Dollar-cost averaging is, objectively, one of the safest and easiest strategies for crypto investment. It simply involves buying a set amount of crypto at set intervals of time.
For example, you could dollar-cost average by putting 5% of every paycheck into BTC on payday. You could also set up a recurring buy on your preferred crypto exchange to purchase $100 of ETH every week. Or maybe you choose to buy $1,000 of BTC every month.
The choice is yours — all that matters for the DCA strategy is that you divorce yourself from the current price action and charts and simply make automated (or relatively automated) purchases in set intervals.
It’s easy. It’s less stressful. And, if you’re an investor with a longer time horizon, it works.
Not your keys, not your coins
When things are getting really bad, remember that they can always get worse. Less-reputable exchanges go bust. Crypto lending platforms may become insolvent. Exit scams become more common. When the SHTF, a lot of industry players try to cut and run.
Because of this, it is perhaps wiser to keep your coins in noncustodial wallets. You could use a hardware wallet or a browser-based wallet, such as MetaMask or OKX Wallet. (To add an extra layer of security, use a hardware wallet with your browser-based wallet.)
The important thing is to remain in complete and total control of your coins. Make sure that you — and you alone — control the private keys to your wallet. Remember: “not your keys, not your coins.”
Source: https://www.okx.com/academy/en/crypto-bear-market-101