- Beginner's Guides
How to Behave in Crypto Bear Market
A bear market refers to a situation where securities rates undergo a sharp downward trend sweeping all the negative reviews. Because of that, investors begin to anticipate the losses in the bear market, and as the selling continues, pessimism grows.
While figures can differ, a downfall of 20% in different broad indexes like Standard & Poor's 500 Index (S&P 500) or Dow Jones Industrial Average (DJIA) can be considered an entry in the bear market. Here are three ways how you should behave and survive in the bear market.
Don't purchase the dip
Through the years, the phrase 'buying the dip' has transformed into a meme in cryptocurrency forums. Based on your aspirations, personal goals, and strategy, the decision to buy the dip may be detrimental to your bottom line.
Buying the dip seldom works within a bear market when the support levels are consistently broken.
For instance, Bitcoin prices can plummet through different support levels from $6,000 to $4,500 within 48 hours. In this case, buying the dip can lead to losses and forced liquidation.
If you're a trader in the bear market, you should stay patient during emotional and dramatic bear moves and wait for signals that confirm a high-timeframe divergence, high trading volume, and critical EMA crossings.
Shorting the rallies
As an alternative to purchasing the dip, shorting the rallies is a better probability trade. While the trends on the downside, EMA can often act as resistance levels. Therefore, an upward move to the EMAs can be seen as a possible short entry. Margin shorting is possible on liquate for several major cryptocurrencies like XRP, BTC, and ETH.
Take a break
While this may seem obvious, to succeed in the field of cryptocurrency, you need an open and calm state of mind. It's common for people to develop tunnel vision during a bear market. If you feel that the bear market is getting to you, take a step back.
If you believe in the potential of cryptocurrency and blockchain, keep in mind that the basics of these have never been this positive in the industry’s brief history.
When the bear market hit crypto previously, the world didn't give much heed to Bitcoin. However, currently, cryptocurrencies have institutional and government recognition. Therefore, you can disconnect and take a break if you feel like it.
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