Bear market is here. In light of the crypto market events, you must have noticed that assets have been plummeting. Many cryptocurrencies have dropped by more than half their value. Considering the events of the last two years, you could say that we are officially in a bear market. This may be a new experience for many. Let’s take a closer look.
Bear market and falling prices
There are recent reports of falling prices on a daily basis. This is not just related to cryptocurrencies, but the market as a whole. No market can just rise, sometimes it has to fall. For the stock market, the average time is 2 years. For the crypto market, it’s about 9 months so far – this also shows how volatile the cryptocurrency market is and can change quickly. The last bear market in the cryptocurrency market was in 2020 and lasted a really short time.
A drop in price can have a huge impact on your psyche. However, higher movements are to be expected no matter what you invest in. At the same time, it’s good to remember that bearish market sentiment offers you a unique opportunity to buy the dip. Even if the cryptocurrency you’re investing in has fallen to half its previous value, there’s still a chance it will go up again and more. Think about this possibility as well and try to avoid panic selling until the selling is completely necessary.
Cash will also help
There’s certainly no need to be afraid of cash. There are assets that are sold for cash and so it is possible to sell short assets to get collateral. In fact, cash gives you a lot of flexibility in where you can invest. Many investors travel from riskier assets (such as stocks) to less risky assets (such as bonds), but lately it seems that cash is what people prefer. And there’s nothing wrong with that at all. Given that the purchasing power of cash changes less than the purchasing power of stocks, this is definitely a good move in some situations.
If this is your first bear market, definitely don’t despair. Think of it as an experience, because there is a definite chance that a bear market will occur again. But if you’re already investing, remember the basic rule: only invest as much as you can afford to lose.