The crypto market is characterized by ups and downs. It’s a feature, not a bug. The volatility makes the market appealing to traders and investors even though it can lead to sudden loss of funds.
When the market moves upward (bull run), speculators who bet on the upward movement of the market make money and those who bet against losses. Similarly in a downtrend (bear market), those who lose their funds are those who bet against the market direction.
In a bear market where prices are falling, market cap declining, what should investors do to protect their funds? This article provides ways crypto traders can use to protect their capital. Let’s go.
Get Into Stablecoins
Crypto traders can preserve their capital in a bear market by diversifying their portfolio with stablecoins. Since they are pegged to fiat currencies, stablecoins are the perfect means to protect against market volatility.
Invest using DCA
Dollar-cost averaging (DCA) is a way a trader minimizes loss by investing in an asset as the price falls. This reduces the average priceinvests money in minute increments rather than all at once. This method effectively protects your capital during bear markets without risking a loss of too much capital.
Take Profit However Small
Taking a profit simply means to sell your assets when in profit. You don’t have to get out of the crypto market totally to do this. This method can effectively help you reduce loss during bear season.
Don’t Panic Sell
Panic selling is one of the easiest ways to run into losses in crypto. Selling should be done based on established data and without emotions.
Research Properly and Invest
It is normal to see sudden price spikes which is soon followed by a continued fall in price. This is known as dead cat bounce. Research the cryptocurrencies you want to buy extensively and be confident in them before investing. Remember, also, some projects that launched with sound fundamentals during the bear market do well when the market turns bullish.
Even with the instability of the crypto market, these are simple and effective strategies to preserve and protect your capital during a bear market. Whatever you do, remember to follow your strategies and be flexible enough to change strategies when your current one is not working.
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