The Crypto Bear Market has been going on for a while now, and it seems like it is not going to end anytime soon. Ben Simpson is the Founder and CEO of Collective Shift, a cryptocurrency education and research platform where Ben shares his knowledge of various cryptocurrencies with like-minded investors.
Do Not Put All Your Eggs In One Basket
According to Simpson, one of the best ways to mitigate losses during a Bear Market is to diversify your portfolio. Do not put all your eggs in one basket. It is tough to predict the bottom of a bear market, but it is also tough to know which cryptocurrency amongst the 17,000 plus will recover the fastest or rally the highest.
One way to hedge your bets is to use Dollar Cost Averaging (DCA) for different crypto assets. This means instead of making one lump-sum investment, you divide your money into smaller fixed amounts that are invested at regular predetermined intervals until the entire capital is exhausted. By doing so, you will reduce your overall risk.
Of course, it is not enough to randomly select crypto assets, invest and cross your fingers, hoping they will “moon” sooner or later. That is a lousy way to do it. Instead, you should perform due diligence on each crypto asset and have a reason for why you selected the assets.
Spread your investments across different cryptocurrencies and sectors to minimize your risk. This way, if the market turns for the worse, you will not be wiped out completely.
Keep a Cool Head
There is a lot of FUD (fear, uncertainty, and doubt) circulating crypto right now, so it is essential to stay informed and make sure you are getting your information from reliable sources. And while it may be tempting to sell all your crypto during a Bear Market, it is important to remember that these markets always eventually rebound. Be patient and wait for the market to turn around before selling. Do not let fear or greed dictate your decisions. Do your research and understand the risks before investing in anything.
There is not a better way to summarize the fear of freaking out than to use Ben Simpson‘s analogy:
“I’ll invest X amount of dollars to the trade and channel profit at Y when I see a bullish RSI divergence on the daily chart.”
Keep Your Eye on The Long-Term Goal
It is easy to get caught up in the market’s day-to-day fluctuations, but it is important to remember that the Bear Market is just a temporary setback. Stay focused on your long-term goals and objectives, and do not let the short-term volatility dissuade you from investing in crypto. It can be tempting to sell everything and cut your losses when the prices are crashing. But resist the urge! The market always goes through ups and downs and will likely recover eventually. If you sell now, you will miss out on the rebound. So, hold on until things turn around.
The Crypto Bear Market can be tough on investors, but you can stay sane and keep your eye on the long-term goal by following these three tips.