What Value Is There In A Bear Market?

The cryptocurrency market, as with any market, can be very volatile. Fluctuating values are nothing unusual. However, when values continue to drop and remain low for extended periods of time, combined with a general pessimism in the market, it is understandable to feel concerned.

When faced with a bear market, there are some things to consider. Perhaps the main thing to note is why has the market shifted to being bear in the first place? The majority of the time, there is some underlying reason, whether it be due to recent news that affects the market or the falling value of the market. Identifying this can be the start to tackling the bear market.

What is a Bear Market?

A bear market describes a market trend of falling prices and general growth in pessimism in the market, much like the current cryptocurrency market which many refer to as the ‘crypto winter’. It is the opposite of a bull market, where the trend of the market is overall growing and positive. The trends supposedly got their names from the fact that bulls thrust their horns upwards to attack while bears swipe their claws downwards.

These periods can last from months to years at a time. A bear market is generally characterized by mass capitulation and negativity towards cryptocurrency. The causes can vary, adding to the confusion and unpredictability. Of course, being trends, these terms offer a simplistic overview of the market rather than an in-depth insight into each individual cryptocurrency. Some may see significant growth during a bear market while others fall.

The term is commonly used in stock exchanges, though it can also apply to the cryptocurrency market as well. With the cryptocurrency market being much more open and democratizing, there is a larger, more diverse population that use these exchanges.

To be expected, a bear market ends when the trend begins to reverse (a market bottom) and thus begins a potential bull market or, in some cases, a bull run. A bull run describes a sudden and significant increase in value in the market

Are There Opportunities in a Bear Market?

Even in a bear market, there are opportunities for success. Being active in a bear market is an incredibly difficult strategy to pull off, however. Staying on top of trends in the market can increase the chance of success.

hidden gemsSo, what to do in a bear market? A bear market is the best opportunity for exploring the market. Thanks to supply and demand, prices will go down as people are looking to sell what they have, so it is a great time to start looking. Of course, just looking at whatever is cheapest or has fallen in price the most isn’t the wisest strategy. As usual, research should be undertaken into the different tokens, the teams and technologies behind them, their activeness with their community and social media, and their overall viability.

While a bearish market is characterized as an overall downward trend in the market, that doesn’t mean that there are not some tokens seeing growth. It is possible to find these gems by putting in the time and the research. With decreased prices, it is the best opportunity to begin diversifying. There are different methods for diversifying, including the types of crypto asset for example. This spreads the risk out over a larger number of projects.

Another opportunity offered by a bearish market is the chance to learn to trade and find the true hidden gems. In a much more skeptical market, people will be much more deliberate in their actions and trades. That means that it becomes a case of survival of the fittest, where the most promising projects become the best performing. This is where the hidden gems begin to reveal themselves.

Of course, there are some activities to avoid. Crypto mining, for example, becomes even less lucrative.

Avoiding FUD and FOMO

With the rising pessimism, it is easy to get caught up in the negativity. There will be many news stories and social media posts that will be constant reminders too, adding to the negative sentiment. This is described as FUD (Fear, Uncertainty, and Doubt) and is especially prevalent during bearish times.

With confidence being low, emotional decision-making is commonplace, as people see the falling value and try to salvage what they can. People will likely try to capitalize on this by spreading FUD throughout the community to dissuade people from entering the market or convincing them to sell off what they are holding.

While in the past there were fewer reputable news sources – or news sources in general – for the cryptocurrency market, there is now a thriving news industry. This means that there are more opinions and updates being shared across the board. This has helped to reduce the impact these outlets have on the crypto trading market, diluting possible FUD and offering countering perspectives for fully informed decision making.

This is why it can also be useful to look at other opinion leaders and see their thoughts on the current market. Relying on just one or two sources isn’t enough. Traders should check multiple sources and see any consistent patterns between them.

FOMO (Fear Of Missing Out) is another thing to avoid. With the talk of low prices and great opportunities, it can start to make anyone feel like they are missing out on the potential for success. This is a bad mindset to have and leads to rushed decisions.

In the end, it is up to the individual to distinguish between what is FUD and what is genuine advice and information. By avoiding emotional decision-making and sticking to trustworthy news sources for information, it is possible to minimize losses. This should help traders to buy low and sell high, or otherwise buy into a promising project.

When Will Things Improve?

When is the next crypto bull runEveryone is looking to go ‘to the moon’. However, no one can predict when the market will change, or if a sudden bull run will occur.

Finding promising projects in the crypto market can be a challenge at the best of times, due to all the hype surrounding them. This makes it difficult to discern which projects have true potential and which ones are just being hyped up. There are key indicators to look out for that can provide a more level-headed approach and advice during times of uncertainty. Many people will look to the past to try and find patterns to help predict future changes.

A good resource for predicting the future of the market is to look at its past. The past actions and patterns in the market can provide some guidance for how things will play out in the future, though this again is no guarantee, especially in such a new market where there is little history to draw conclusions from.

There have also been changes occurring and more will continue to occur going forward. For example, it is still unknown how regulations for crypto will affect the market. These will certainly make a big impact.

Market sentiment can also be a good indicator of change. Seeing how traders feel about particular cryptocurrencies or their views on the market as a whole can signal potential areas of growth. The traders are of course the lifeblood, creating the liquidity and demand.

Watching the dynamics online through social media or news channels can, therefore, paint a picture of shifts in the market. Bear and bull markets are ultimately just the sentiments of the market being put into practice, after all.

Facing an Uncertain Market

The cryptocurrency market has its ups and downs. While it sometimes can become bearish for longer periods, there is often very little reason to be concerned. The market is continuing to mature and crypto scams are beginning to decline, the major ones at least. Taking steps to analyze and look for opportunities can lead to potentially big rewards. As always, due diligence is key.

For those more averse to risks, it might be worth waiting things out. Bear markets don’t last forever, though it is also difficult to predict when they start and when they finish. When armed with information and analysis, it becomes easier to predict and take action as needed. There do appear to be signs showing that the market will grow substantially and move away from a bear market to a bull market, so all eyes will remain on any changes. Ultimately, supporting new and promising projects is the best bet for traders and will help keep the market alive.

 


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References:

Bovaird, C. (2019, February 19) Has Bitcoin Broken Free From Its Bear Market? Retrieved from: https://www.forbes.com/sites/cbovaird/2019/02/19/has-bitcoin-broken-free-from-its-bear-market/#3c3c4f082d17

CoinBundle Team (2018, October 1) Why investing in crypto during a bear market is good. Retrieved from: https://medium.com/coinbundle/why-investing-in-crypto-during-a-bear-market-is-good-1f0b4d00b2b1

Cole, B. (2019, March 6) An Objective Argument To End The Cryptocurrency Bear Market. Retrieved from: https://hackernoon.com/an-objective-argument-to-end-the-cryptocurrency-bear-market-12125b3d9111

Lehman, J. (2019, March 18) Why The Bear Market Is What Crypto Needed And How You Can Be Prepared For The Next Bull Run. Retrieved from: https://www.investinblockchain.com/bear-market-is-what-crypto-needed/

Matthews, K. (2019, March 19) What indicates the start of a bull market run? Retrieved from: https://born2invest.com/articles/indicates-start-bull-market-run/

Peterson, C. (2019, April 11) Bitcoin Could be Forming a “Golden Cross” Pattern, Is the Next BTC Bull Run Imminent? Retrieved from: https://www.newsbtc.com/2019/04/11/after-forming-golden-cross-pattern-is-the-next-bitcoin-btc-bull-run-imminent/

 

Risk Warning: The cryptocurrency market is available worldwide 24/7 for trading with no market opening or closing times. Please do your own risk assessment when deciding how to invest in cryptocurrency and blockchain technology. KuCoin screens all tokens before they come to the market; however, even with the best due diligence, there are still risks when investing. KuCoin is not liable for user’s investment gains or losses. The information we provide is for users to conduct their own research. It is not investment advice.

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