We can talk about it long or short, but unfortunately we cannot ignore the conclusion that we are in a bear market. For that reason, we think it is interesting to look at strategies that have been successful in the past in comparable periods. In this article, we briefly review three ways in which the bear could have been defeated in history.
Dollar Cost Averaging (DCA)
The economy and the market are unpredictable and nobody can predict how, when and whether the market will eventually bounce back. One way to tackle this uncertainty is by using a so-called Dollar Cost Averaging strategy. This strategy is simple and ensures that you always include part of the bottom.
In the first instance, it is important to identify which financial assets you have confidence in for the future. For example, suppose these are bitcoin and ethereum. Then you then grab a fixed amount per month or per week that you could miss for a long period of time or even lose completely without getting into trouble.
With this amount you then buy a bag of bitcoin and ethereum every week or month, so that you slowly move down with the market and (hopefully) then move up again. You don’t get the ultimate bottom with this, but the risk that you buy everything at the wrong time is also smaller. Actually, this is a ‘safe’ and safe way to do that.
You can have this done automatically at various exchanges. For example, at Coinmerce it is possible to put a so-called ‘repeating order’ in the booklet. The system will then automatically perform this for you every day, week or month.
The safety of larger coins
Would you rather not get out at all, because you are afraid that the prices could rebound at any moment? Then it might be useful to choose the larger coins during a bear market. For example, what we saw in the past is that Bitcoin, among others, outperforms the rest of the market in the bear market.
This is because bitcoin has a large army of ‘believers’ behind it who buy in at any rate. You can think of this as a kind of Dollar Cost Averaging army that buys in at any price and tries to collect as much bitcoin as possible. This is in contrast to some other currencies, where people mainly step in during the bull run to collect more fiat money.
In the case of bitcoin, this is different for a large group of people. These are guys and gals who believe that bitcoin is the future of the monetary system and that eventually we won’t need fiat money at all. In the past, to limit losses, it was a good choice to be in major currencies during the bear market.
Earn and Strike
What you also see a lot at major exchanges these days is that it is possible to stake crypto or put it in so-called Earn programs. In the event of a staking, you must choose a Proof-of-Stake coin and then either have it secured for you with a wallet or on an exchange platform of your choice. You will then receive a fixed return on this.
Staking is a relatively safe way to earn some extra pocket money with your crypto assets. Another way to do that is through so-called Earn programs that we see more and more.
The Dutch Coinmerce, for example, makes this possible, so that you can earn a small interest on all kinds of different coins. Please note, this often involves risks. Read up on the possible risks before you choose to tackle the bear market in this way. Create an account with Coinmerce here and discover what Earn has to offer.