How to survive the crypto bear market

Crypto users love rallying behind communities and memes. There’s none more popular than WAGMI (We’re All Gonna Make It).

The recent bull market brought millions of crypto investors into the market — and now, over half of Bitcoin investors are estimated to be losing money. Are we all really gonna make it?

What is happening with the crypto markets?

Per OANDA Senior Analyst Edward Moya (BBG) — “Bearish sentiment remains the theme for cryptos.” Terra’s implosion left a sour taste among many investors, and prices continue to fall.

In a post, Mika Honkasalo, an investor at ParaFI Capital, shares his thoughts about the state of the crypto market:

1/ What’s stabilizing the market? Long-time crypto investors took profits early on and aren’t in a rush to sell more — and are sitting on the sidelines now.

2/ What can cause crypto to go lower? Non-crypto natives that took a beating buying early in 2022 — could be the next sellers.

3/ Why isn’t the market going up? Existing investors don’t have the capital to drive prices higher — and it’s uncertain when buyers will come in again.

He emphasizes that there’s no rush to do anything.

Nothing is certain in crypto

With crypto prices down, Gritt Trakulhoon of Titan sees bear markets as an opportune time to “accumulate coins you have long-term conviction in” (BBG).

If even tokens in the top 10 list aren’t entirely safe (i.e., $LUNA and $UST), what can we have conviction in? What about Ethereum ($ETH) — the second-largest crypto by market cap?

Existential threats: In one scenario, a better mousetrap is built, and everyone stops using the network.

• Another breaking point could come in the Ethereum Merge — seen as the biggest blockchain upgrade ever.
• An upgrade to a protocol that manages hundreds of billions, which many other blockchain projects rely on, has risks.

Ethereum developers have been carefully debugging the upgrade and running tests to ensure it goes smoothly. If the merge fails, there are ways to revert the upgrade and go back to the old version — but it could take time, have ripple effects and lose user trust.

While both scenarios are seen as unlikely — certainty can be one of the most dangerous things in the world.

Investors: Surviving bear markets

It’s definitely easier to be a crypto investor today; if you bought Bitcoin in 2015 for nearly $300 — you’d still be up over 90x on your investment. But not so easy for most investors who are down on their investment.

• For the beginner: Is this your first bear market? Are you new to investing, or do you have a job unrelated to crypto? Per Bankless, here’s one beginner strategy to get through the bear market…
• Strategy: Identify what you want to own — and make period investments (dollar-cost averaging) regardless of market conditions.