In the actual political and economic context, many people talk about the bear market, how bad it will be for us in the next period, and how a big economical crisis will hit us. I’m not in the position to say if there will be a big economical crisis or not and also I’m not in the position to say when a bear or bull market will come. But what I can do is to present to you what actually the bear and bull market is and what we should do when it comes.
The bear market is a period of time when the supply is high and the demand is low. In this period of time usually, the price is falling, and this it’s happening at a market level, which means it applies to every asset. This also reflects the pessimism of the investors related to a loss of confidence in the overall performance of a market.
There can be a mini bear market or a big bear market. The small one is for a short period of time, like days or weeks and usually can be seen as a normal correction on the market. But the big one is for a long period of time, usually months or even years. But why is this happening? Well, there are more things that can influence the market. As we can see now, a war, a political decision, an economical crisis, or maybe just because the market is over-evaluated. But behind these things is just one true reason. The investors, not all but many of them, become scared that these factors can negatively influence the price of their assets and they decide that is better to sell when the price is high than to wait until their assets will depreciate. Another kind of investors try to drag the price down because they want to be a bear market there because they want to accumulate more. In this way, they create panic, and all weak hands become scared and start to sell because they think like those from the first example. But what should we do when a bear market comes and how to survive? The answer is simple. Do not sell. If you didn’t take the profit when the price was high, don’t sell when the price starts to drop. You will lose money in that way. If the price dropped, it is better to keep your tokens until the price rises again. Also, the best decision in the bear market is to buy, and the best way to do that is to do DCA (dollar-cost averaging). In this way, you can secure your investments because you are buying even if the market is down or it starts to rise again. This way is the best way to make profits in the long term and also it helps you to accumulate more coins at a low price in the bear market. The secret in this kind of period is to accumulate as much as you can because when the price will be high again you will be able to sell and take profits.
Ok, ok, we’ve talked about when the whole market goes down but what if the market goes up? Well, when there is a long period of growth that means that we are in a bull market. In this care, there is an optimism of the investors that the market will continue to grow and the prices of their assets will appreciate. This movement can be determined, exactly like in the bear market, by political decisions that can help in a way that market. Also, the rising price of the market can be motivated by big buyers or whales, which start to buy big amounts of tokens. This movement is used when the big players want to drag the price up. Of course, when an all-time high is touched they start to sell, and in this way, a correction occurs in the market. But what should we do in the bull market? Well, it depends because we never know when it can end. So the best way is to set yourself a target where you will decide to sell and take the profits. This decision can be based on the last all-time high. Let’s say that you did buy BTC at 30k$, and at that point, it was a bear market. The last all-time high was 69k$. At this point, we can presume that the 69K$ is a zone of resistance so it is very possible that the price will be pushed back down from there, so based on this logic you can set a target at 60k$. But you can set the price wherever you want as long as you take the profits.
I still don’t understand those people that are scared about the bear market and when it comes, they start to sell. But, when the bull market comes they start to buy a lot, and usually, they buy when the price is high. There is one golden rule about this, Buy deep, sell high! That means when the price is down then is the perfect moment to accumulate, and when the price is up then is the time to take the profits. Easy! If you want to know more about how to not lose your money in crypto, I have HERE another article on this subject. Take a look, maybe it can help you!