Crypto experts and analysts define a bear market as a situation where supply supersedes demand, reducing prices, similar to basic economics. However, while investors break their heads over their reduced returns in a bear market, it might pave the way for new buying opportunities, bringing in new investors.
How to Trace a Bear Market
A bear market is ideally a situation where crypto prices decline by 20% or more within a short duration. Thus, prices hit an all-time low in such cases, with the cryptp prices lingering towards the base. While the prices oscillate downwards, bear markets are also characteristic of highly volatile markets with a dynamic deterioration in crypto prices. While factors like large-scale unemployment and reduced purchasing power might cause economic downfall, such economies can increase the chances of the market becoming bearish. However, there might be several other factors like wars, pandemics, and periods of anomie where a bear market may manifest itself.
“Buying the Dip” Strategy
While most investors are taken aback by the recent bearish trend in the crypto market, it might be a boon for new investors. “Buying the Dip,” a popular strategy by Warren Buffet, states that bear markets can be the best time to buy crypto while others are selling to negotiate their investments and returns. With dipping crypto prices, new investors might enter the arena by buying cryptos at a discounted rate and benefit from existing investors. In fact, veteran investors may also look for buying opportunities in such a market situation instead of trying to sell existing holdings.
Long Term Investments in Bear Market
With the recent bearish trend in the crypto market, crypto analysts see no relief in the near future. Thus, new investors must walk into the market with long-term investment plans. While they have enough scope to buy cryptos at lower prices, they are far from receiving their returns in a short period. With the expected dip in crypto prices in the future, new investors can only survive with a long-term investment strategy to wait for the market to buckle up. If not for this, the chances of new investors landing in soup are inevitable.
Shift from Selling to Buying
Gone are the days of panicking over a failing market and selling your holdings in haste. Instead, financial experts suggest a change in investor strategies. One must buy digital assets at lower prices in a bearish market instead of selling them at whatever price the market offers. Though the returns might seem too far-fetched, short-term losses are seldom likely to affect you if you have a long-term strategy. Furthermore, it would be best for investors to spread out their buying decisions over a more extended period in the bear market to make the most of a bear market.