The Complete Bear Market HODL Guide

Think long-term and HODL

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Given the dynamics of 2022 in the crypto market, it is volatile to say the least.

You may be holding a winning position or have lost everything you have invested in this market, but the key to success is to remain calm and think long-term.

The key task of the trader is to save his capital during a falling market. Contrary to popular belief, successful traders are not those who make the most money in a growing market, but the ones who lose the least in a falling.

Trying to manage risks at the moment when everything is falling is like being late for an evening party. You need to prepare for such situations in advance (and you need to know how) to be fully armed during the next bull rally and correction.

Take your time and learn more about Technical and Fundamental analysis, read books to level up your financial and trading skills, and research more decent projects to expand your portfolio in the future.





Preserve your capital and HODL Stablecoins

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But that doesn't mean you have to go into hiding. There are plenty of ways to make money during a bear market—if you're brave enough.

Some traders manage to make money on the falling market, but it requires a lot of skill and nerves because the risk of losing everything is very high.

These masters usually apply short-term strategies and do day trading to make small profits for their portfolios. This tactic can double the size of their portfolio or wipe away all of their money, leaving them with empty pockets.

The best thing you can do is save your capital. If you are savvy enough, try to diversify and rebalance the portfolio. There are plenty of strategies on the net – you can change a portfolio each day, each month, add various coins less hurt by the downtrend, etc. It may help to decrease the risks when the market takes another downward turn.

If you’re also looking to hold your coins in a secured wallet, [Gate.io](http://Gate.io) has released an advanced on-chain wallet with most of the benefits of an off-chain wallet on [Wallet.io](http://wallet.io).



Dollar-cost averaging or “Buy the Dip”

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What's a dip? It's when the market is experiencing a downward price movement.

And the common phrase ‘buy the dip’ is a strategy that involves buying coins whose prices are falling, so you can take advantage of the potential for future growth.

Investors who have held back a reserve of fiat currency or stablecoins, or have expendable capital in their bank accounts, will have the ability to “buy the dip.”

While buying the dip can be done in a single trade, the most recommended strategy is to implement something called “dollar-cost averaging (DCA).” This involves breaking up your reserve funds into smaller tranches and making several trades over time.

It's incredibly difficult to know exactly when an asset has bottomed out (reached the lowest price before reversing), so instead of spending all your money in one go, it usually works out better to buy a small amount and wait to see if the asset falls in price further. If it does, buy a little more, and so on.



DYOR or “Do Your Own Research”

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DYOR or “Do Your Own Research” is a popular phrase used in the crypto community. It means that you should be responsible for your own investment decisions, and not just take someone else’s word for it.

It can be very easy to get swept up in the hype of a new coin or project, but remember that there are many free resources online to learn about crypto and investing. There are also many essential tools like Glassnode, IntoTheBlock, and Tradingview that you can use when you’re investing. Additionally, understanding a project’s tokenomics is essential before buying the dip.

Within a project’s tokennomics, its Market Capitalization refers to its total value while Fully Diluted Valuation (FDV) refers to the total market cap if all tokens are unlocked.

FDV could be very important when you’re comparing two similar projects. If a blockchain project has an unusually high FDV when it’s just launched, remember to check out its economic model: How many tokens remain to be unlocked? Does the developing team have a mature roadmap to deal with inflation? Who’s holding and trading the locked tokens behind the scenes?

In a nutshell, FDV allows you to identify if a token’s price is overvalued and avoid the traps caused by the low initial supply, especially for long-term investors. Even though crypto valuation can be very difficult– you don’t have any balance sheet or income statement to look at, and this is a very young market with 24/7 liquidity compared with traditional finance, knowing those basic concepts of tokenomics still helps with your fundamental analysis of crypto projects.



When does a crypto bear market end?

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In traditional equity markets, investors consider the end of a bear market when the decline exceeds 20-30%%. However, the crypto industry has gotten used to radical falls as high as 70% and can remain down for more than a year.

So how do you know if it's time to get back into crypto? Think about it this way: if you're an investor and you have been waiting for the end of your bear market for three years, maybe it's time to stop watching Bitcoin prices so closely and focus on something else for a while.

If you're an investor who is still holding onto their coins, here are some questions to ask yourself before selling:

Is this coin still relevant? Are there any competitors? Has the company done anything new or exciting recently? Is there any reason why I should hold onto my coins instead of selling them now and buying back in when things look up again?

At the end of the day, altcoins, memecoins, stablecoins, etc. are all connected to Bitcoin, which leads most of the price movements. And Bitcoin is influenced by the dollar which is affected by macro factors such as the global inflationary crisis and interest rate hikes.

The cryptocurrency bear market is still in its early stages as the world is doing all that it can to reverse course from a potential recession caused by inflation, and we haven’t seen any major changes yet as of late 2022.




Author: Gate.io Researcher Peter L.
This article represents only the researcher's views and does not constitute any investment advice.
Gate.io reserves all rights to this article. Reposting the article will be permitted provided Gate.io is referenced.
In all other cases, legal action will be taken due to copyright infringement.