How To Survive a Bear Market

No chance that it has passed you by - we are in a bear market. Again.

Over the past few days, not only stock markets but, unfortunately so, the crypto market has tumbled badly. Many traders are currently panicking and are massively converting their crypto into cash, leading to such low prices that it makes one wonder if the possibility of making money at all still exists.

When markets are going down, trading gets more difficult, naturally. However, opportunities also arise.

We are not here to give you financial advice, but we do like to share some insights on how to survive a bear market.

A Bear Market: How Does It Happen

Before knowing how to tackle a falling market, it helps to understand how such a market actually occurs.
There are several factors that could explain downtrending markets. Some have to do with sudden events, others are more gradual.

What goes up, must come down
Even though we are not talking about physics, this law applies. The crypto market is not immune from moves like these, either. Besides, most crypto investors own stocks as well. The crypto market is still influenced by the stock market — which went down as well.

(Geo)political factors
Other, more general factors affect the crypto industry as well.
The war in Ukraine is ongoing, which has an impact on oil prices, inflation, supply chain issues and adds to overall unrest. Besides, lingering Covid outbreaks and lockdowns, combined with slowed growth in China cause instability on the stock market — like it or not, crypto still often follows the stock market, causing it to fall as well.

Luna
Another big factor is the news around Luna. Even though their name translates to ‘moon’ in Latin, their charts went the opposite way these past few days.
The popular stablecoin TerraUSD crashed significantly, breaking its $1 peg. The decentralized stablecoin was supposed to be backed by Luna, but also other crypto assets, such as Bitcoin, causing them all to crash in a vicious circle.

Making Money in a Bear Market

Enough bad news, let’s talk about your possibilities during crashes like these.
While bull markets usually gradually move up, prices can fall in a blink of an eye during a bear market. There are several strategies to minimize the loss, though.

The Big Short
A popular strategy in falling markets is shorting. There are several ways to short cryptocurrencies. While it could be a risky business, shorting can provide an outstanding way of earning while assets fall.

Buying the dip and dollar cost averaging
While shorting may sound like a move cut out for the more experienced trader (it is an advanced strategy, after all), buying the dip may be a more familiar term. With sufficient funds and trust in the future, one can accumulate its portfolio at a discount, as asset prices are low.

One risk-aversing method one may apply is Dollar Cost Averaging (DCA). DCA is a strategy in which one would divide the total amount invested over separate buying moments. By applying this method, your average price will be better and you will reduce the impact of volatility.

Algorithmic Trading
Last but certainly not least there is algorithmic trading.
One thing bear markets cause is panic. During a bear market, lots of emotions are in play. People buy and sell, solely driven by FOMO and fear. Because everyone wants to buy the dip, it might be hard sometimes to keep a clear overview and decide on what’s best to buy and when to buy that certain asset.
Arguably one of the most strategic decisions is to let algorithms trade for you, especially during bear markets. After all, trading algorithms are not affected by FOMO, panic, or other interfering factors. Besides, they operate in an ever consistent manner, even during the bearest of markets.

Mercor Finance

The Mercor platform with its trading algorithms

While algorithmic trading might be one of the go-to strategies in a bear market, it is not always an accessible feature. This is where Mercor Finance comes into play.

Mercor Finance is the first and only fully decentralized algorithmic copy-trading platform. On the Mercor platform, algorithms are trading crypto around the clock, non-stop. Anyone is able to select and invest in one of these bots. The algorithms are created by the industry’s leading developers and hedge funds and are designed to trade at unmatched speed, which enables them to buy and sell for the best prices — at the best moments.
If you are not sure when to buy, when to sell or what to buy or sell, consider an algorithm that’s programmed to make those decisions in the best way. Once invested in an algorithm, the trading is automated, which makes your income almost entirely passive.

Check out Mercor here.

--

--

--

Mercor disrupts financial markets by building a bridge between algorithmic trading and every-day investors worldwide. Official website: https://mercor.finance

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Recipe to create Bitcoin (BTC)

Muuu Finance April Newsletter

NEO Council Monthly Report — December

reconstruct the monetary world with STABILA

Jerome’s Journal: Hippalectryon — Page 27

CryptoNesia x DCTDAO AMA Recap

Bitcoin smart contracts lay the foundation for tokenized real property

How to Earn More with OpenOcean

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Mercor Finance

Mercor Finance

Mercor disrupts financial markets by building a bridge between algorithmic trading and every-day investors worldwide. Official website: https://mercor.finance

More from Medium

Why Quant Trading is the Futu

What is the Daily Loss Limit in Trading?

Knowledge is Power

What is Algorithmic Trading