The market has been down nearly 60% since December’s high. This is a difficult time for everyone. This is not a sign that markets are improving or that they are at the bottom. This isn’t something that’s new. We all know it feels hard for investors.
Similar patterns of price action, on-chain activity and other market patterns have been seen in previous bear markets. It’s important that you remember that these patterns are common throughout the market. We will be able to profit from the recovery opportunities later on if this bear market is overcome.
Learn More: Crypto Investing vs Crypto Trading
This article will help you with your investment research. These strategies for investing in bear markets will help you make smart decisions.
Bear Market is like a dark tunnel. We’ll show you how to zoom out
Although it can be difficult to comprehend the six months of crypto bear market, we want to remind you that this is not the first time in a long while that the digital asset class has seen such a drastic downturn. Many people wonder, “Is this going on forever? Is crypto in a bearmarket permanently?”. The answer is yes, if you look at the bigger picture and remain invested.
This is what we’ve seen before with Bitcoin, where traders emerged victorious in 2011. Because they had long runways for growth, Ripple was one of the best coins to invest in.
These cycles can be distinguished by not only price patterns but also on-chain indicators and developer activity. Investor distribution is another way to distinguish them. Let’s look at these investing strategies for bear markets.
80% Drawdowns Aren’t What They Used To Be
This is a common occurrence in crypto bear markets, with a drop of more than 80% across most crypto assets. There are however reasons to expect less severe losses in future.
The likelihood of crypto assets vanishing diminishes as they mature as technology. However, this is true for more established crypto assets but less so for smaller, more speculative assets in their early stages.
Learn about: Trend Analysis and Understanding Crypto Asset Buying Patterns
While many indicators have been affected by the current bear market, some indicators have remained stable. One such indicator is the VIX, which indicates market expectations for volatility and sometimes called the “fear Index”.
On-chain indicators have maintained higher levels than during the bear market. This indicates that crypto investors still have a lot to invest in the space. Here’s why:
Transaction fees fall because speculation is a significant source of demand. Bitcoin and other crypto-assets are following a similar trend, with less significant decreases in transaction activity than in previous bear market.
Growth in Development Activity
Bitcoin and Ethereum are both making steady progress regardless of the price.
In the last two years, we have seen a dramatic rise in Bitcoin users. The number of Bitcoin transactions committed has increased by more than 50% in just two years. This proves that, despite the volatility, many people have a growing confidence in Bitcoin’s long-term prospects.
This is one of the most important indicators of crypto growth, since it’s an open-source ecosystem that relies on developers from all over the globe to improve these networks.
You can also see a shift in recent years towards long-term investing by investors. This is important as it means that investors are more willing to take on risks.
Investor capital has moved from short-term investments towards long-term investments as a result. This is an indicator of how investors’ capital has changed from short-term to longer-term investors in bear markets. What does this all mean?
Hodlers Double Down
It might seem obvious that crypto assets should be viewed as investments with a short-term view. You can still take advantage of the up-and-down markets to grow your holdings over time if you invest for the long term. Hodlers Double Down investors do exactly that.
We have so far been able capture a trend that is visible in other markets. In previous bear markets, the percentage of Bitcoin held by addresses that have been holding it for at least one year has increased.
While short-term traders continue to hold their positions and crash with the rest, long-term investors slowly exit as the price drops.
While we agree that the crypto bear markets are volatile and in turmoil right now, it has been this way for many years. Early internet stocks were volatile, for example. This is a common pattern for new technology. Similar patterns have been observed in other industries, such as commodities, semiconductors and biotechnology.
We see overall a smaller drop in on-chain indicator, an increase in developer activity, long-term investors doubling back, and a continued rise in developer activities.
Buy Bitcoin & Crypto.