Over $328 billion has been washed away from the global crypto space in the last week of January this year. That is more than the total market cap of pharmaceutical giant Pfizer. Many investors both veteran and new will be trapped in this falling market and will not be able to cash out without facing huge losses. But if they follow certain strategies while they trade in this bear market, losses can be avoided to certain extent. So let us have a look at the strategies of bear market crypto trading.
As per a report, 28 percent of Bitcoin investors and more than 31 percent of Ethereum investors are “out of money” presently, implying the value of both the digital currencies are now less than what the investors have paid for them. For digital assets like cardano, over 87 percent of investors are presently in red. These are crypto market bull or bear indicators.
What Is A Bear Market?
Unlike the bull, there is no concrete definition of bear market. When the market is down by nearly 20% from its latest high for at least a span of two months period, that phase is known as the bear market. They are always contrasted with the upward trending bull market. There are varied reasons for a bear market to take place.
Bear Market Crypto Trading Strategies Every Investor Should Know
A bear market takes place when there is a progressive downtrend for a specified time span. Trading digital currencies without any plan washes your hard-earned money away as the market continues to fluctuate randomly. With bearish market trends, the strategies for trading differ and they are the worst nightmares for any new trader.
Bear markets are what segregates wannabes from experienced digital currency traders. They command knowledge, discipline, and profit for resilient traders. This guide will help you to find the best strategies for bear market crypto trading to overcome the primary obstacles in trading digital currencies. These strategies are made with certain bear market crypto predictions.
Improve Your Technical Analysis
The one thing bear markets are apt for is homework. The benefit of technical analysis may be controversial, but no trader who has sound knowledge would consider a trade margin with no primary understanding of the trade. Simple analysis like moving averages and RSI should lead the route, followed by other complicated ones like Ichimoku, Fibonacci, and others.
Most traders have a life that is away from the trading screens, and hence it is highly likely that they do not have that time to become technical analysis experts. Getting a hold of the basic technical analysis methodologies helps one with better time for their exit and entry positions.
This term is at times used to refer to a novice as the first thought of everyone is a misspelling. This was often true during the day when the word was first coined. However, presently, it is a recognized term for any crypto investments.
HODL implies that traders do not sell their cryptos even when the bear market shifts deeply into the red. In simple words, this is a trading strategy that is commonly used by individuals who are patient and use a long-term strategy. Most investors think that the present low prices and fluctuations of cryptos settled as the market is still latest.
HODLing is now a big part of the crypto space and has become a famous philosophy for recent investors. It can also avail the strategy in other industries, and the only downside is that the future is hard to tell.
Margin trading is when an individual purchases and sells digital currencies or any other investment form with borrowed money. Hence, users go into debt to trade. It is widely referred to as short. This is also referred to as short position or short selling and takes place when a trader borrows shares and then sells them, predicting or hoping for a reduction in the stock price in the future.
Cryptos such as Okex, Bitmex, and Poloniex provide a great way of earning profit in the bear market. Users do not require to be professionals to get huge profits from margin trading. All you require is to do it right. Learn the basics of charting, and you will begin to make consistent profits with this trading strategy.
By shorting, traders can efficiently profit and sell from assets they do not completely own. The borrowed assets are sold at the existing market values, which is all that short trade is related to. Short selling is also employed for hedging. If one holds a good amount of an asset, say BTC, they can open a short position to decrease fluctuation.
For example: shorting $2,000 worth of cryptos with a 10X leverage will wash out your balance after attaining +10%. Ensure you keep this in your mind if you opt to use greater leverage. Margin trading has great rewards but only for people who have an in-depth evaluation of technical analysis basics.
Uncertain markets provide the chance to earn money by formulating profits off the small value alterations. Scalping is at times a smash-and-grab type of work that requires the willingness to grind out via frequent purchasing and selling, along with a lot of free time.
However, it does offer its perils like other strategies. It only requires one big fail that can frustrate your complete day’s hard-earned buck.
At times, the market has a lot of unforeseen risks with the various strategies for bear market crypto trading one can use. Newbies and even veterans may choose to take a directional risk by using Automated trading methods in such situations. What differentiates them from new investors is automated trading and employing bots which are gradually becoming famous.
Most traders employ stop-loss, which is a good thing, but this is not formulating more winning opportunities. The same element can be applied to trigger trades, mainly when using a trailing stop. Trailing stops triggers latest trades and automates the process, prominently decreasing the requirement for checking values frequently.
Expanding your portfolio is a good risk with the various strategies for bear market crypto trading strategy for traders in general. Practicing and allocating often. Trading in crypto bear markets can be straightforward, based on how informed you are.
Lastly, always keep up a good work, trade, exercise, and rest balance. Wake up every day with a precise focus in mind while not ignoring your family and life. A good balance is important to attain your final trading goals. With that, you are now prepared to earn profit from the bear markets crypto 2022.