Here we are deep in a bear cycle. Somewhat depressing, no doubt. Daily checks of crypto folios rarely reward and any pump is soon followed by a steeper dump. Grim. However, there are meaningful ways to benefit from the bear.

Above there is an opportunity to get ‘crypto smarter.’ Since you no longer need to monitor the market so closely (it’s down – trust me), you may find yourself with a lot of crypto time on your hands. Like any other endeavour the more informed you are the better your decisions are likely to be. So now is the ideal time to invest your time rather than further money into crypto. This should lead to an improvement of your understanding of the broader crypto market and what underpins it. What to focus on? Tech, investing and sentiment, these are three areas that will reward those who take the time to get to grips with them.

Tech

It really doesn’t matter where you are in terms of your knowledge of current crypto tech – it could be better or more up to date. Have a good handle on BTC basics, then dive into MimbleWimble or Grin. If you follow EOS why not complete the free EOS course offered by eosDublin? Of course, developer-level knowledge isn’t required, but to make money long-term in crypto, you will benefit greatly from being able to make informed decisions yourself on tech innovations and just as importantly particular project tech limitations. Credits, for example, is claiming 1 million TPS with demos to ‘prove’ it.  However, dig a little deeper and the lab-like limitations of the presented data set becomes clear.

Investing

Investing is a whole lot easier than day trading, you pick a perceived winner, monitor the project’s fundamentals and wait for 5 to 10 years. Within this bear trend, you are likely watching your investments tank with the rest of the market. Price action aside, now is the time to reassess your current holdings. Good – keep. Undecided – monitor closely. Bad – look to sell on rebound, accept a loss. For the last category – write it down. Note the price rebound target you have set and if / when it gets there sell! If you don’t set this target in stone, chances are you will hang on for more upside likely missing the opportunity to get out of a bad investment. Setting up price alerts through trading apps like TradingView or CoinMarketAlert will greatly simplify this process.

Another key benefit to an extended bear market is that it provides a comparatively hype-free environment within which to research possible future investments. It’s a lot easier to make a reasoned assessment of the potential of a project when the price is stable or trending downwards rather than shooting up by 10% or more per day. Once you’ve identified fundamentally sound projects to invest in and actually invested, you have at least avoided the all-time highs and over a long enough horizon improved your chances of a solid return. The bear is where the money is made, the bull is where you get off the train to buy back in during the next bear cycle. Exactly how to go about this is a whole other topic, but the ‘buy low sell high’ mantra covers the concept.

Rebalance your portfolio. Cast a stern eye over your current investments and trade out of the losers. You know the ones, the cryptos bought after a YouTube influencer said it was ‘under-valued’ or the one you bought pending ‘ great announcement’ and so on. Pair the investment with another already in your portfolio and swap out of the fundamentally unsound project while increasing your investment in a project you still believe in. Remember most cryptos are down 90% or more so you have an opportunity to ditch the obvious losers while taking a minimal loss. You might also just use the funds to invest in a new project but in either case, do your research first. For example, just because you liked Qtum 12 months ago doesn’t mean it’s a good investment today. Investment hopping without due diligence is one of the best ways to unnecessarily whittle down your capital, so take your time.

Sentiment

The market is a living thing, it has moods. It sometimes feels euphoric or depressed, it throws massive tantrums, it’s the ultimate version of a sensitive teenager. It’s deep, A is not equals B, the market is complicated though the expression of it’s sentiment is not – up or down, down or up. Learning to parse market sentiment is very useful when assessing investment opportunities. If the market is consistently ignoring good news even while generally trending upwards, this is a strong indicator of future bearish price action. In contrast, if a minor development sees a large pump in price a bull run may be looming even in the midst of a bear cycle.

This might seem obvious but take our current market sentiment – broadly very bearish. Good news rarely matters, bad gets exaggerated – Goldman Sachs reported shelving of plans for a crypto trading desk being a recent example. However, this is the time to be searching for green shoots, (or weeds in a bull market). Are some coins beginning to move on positive news and more importantly are they holding on to their gains? Right now, a number of high-profile projects such as EOS, XRP and XLM are all showing positive price movement. What they have in common are fundamental positive developments. These projects could be the first signs of a change in market sentiment. Of course, if they lose their gains, market bearish sentiment remains in place. No one partnership, tech development or sign of adoption is likely to flip market sentiment, but as they accrete, a spring-like lag does accumulate and when market sentiment finally shifts it tends to do so very quickly.

A note of caution; don’t try to pick the bottom but rather stay attuned to broad market sentiment and after a significant (but early) confirmation of a reversal in trend such as the aforementioned projects holding price gains on a weekly basis, dollar cost average back in. Remember in a bear trend you are more likely to see your investments lose value in the short-term so going ‘all-in’ is unlikely to be rewarded.

To sum up, the bear is an opportunity. Wishing prices were higher is a waste of mental energy. Embracing the opportunity to improve your knowledge of the cryptosphere is the absolute best means of maximizing your returns when the bulls finally decide to stampede and stampede they will.

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Responses

  1. Infosion

    I think you’re very right. Now it’s the best time to correct some of your diversification and get rid of investments which still have value but no future.
    Very well written article, I think I learned a lot, thank you very much!

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  2. Will Stanley

    Great article! Yes, I agree that when investing, we need to dollar cost average and not just bottom pick. I flipped Ox but keep adding to XRP and BTC because those coins are a true investment during a bear market. Fortunes are made during bear cycles.

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  3. sandwichbill

    Good stuff. I’d also seen the Credits tps claim and I wasn’t quite sure whether to believe it. A lot I projects I was eyeing last year don’t look quite so attractive now, as you say, but there are a few blue chip projects out there, you mentioned these and I do think XLM’s involvement with patent chasing IBM will set it up for good future growth. Have you been on the eosDublin course?

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    1. CryptosDecrypted Post author

      Thanks, @sandwichbill. Credits is very well marketed and announces new partnerships on a regular basis, but looking under the hood I just don’t see a competitive platform. Yeah, IBM / XLM that’s a real partnership with a whole lot of upside potential imo. eosDublin, I’ve completed a few early modules, but hope to dig-in in the coming weeks.

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  4. miti

    Wow, that’s a great article, one of your best!

    “So now is the ideal time to invest your time rather than further money into crypto.”
    That’s an excellent suggestion!

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