How to survive (and thrive) in a Bitcoin bear market
Bitcoin bear markets can be brutal – and depressing. Instead of enthusiasm, pessimism prevails and Bitcoin is considered dead for the 500th time. But don’t worry: We’ve been there. Here are five tips on how to not only survive but also thrive in a Bitcoin bear market.
Read on to learn how to handle a Bitcoin bear market.
A lot of people expected a rocket ship and are now surprised that it’s actually a rollercoaster. Sure, the global macroeconomic situation is quite different: disrupted supply chains, the Russian invasion of Ukraine, skyrocketing energy and food prices, and (for now) higher interest rates are reasons to worry.
After some very bullish months since mid-2020, we’ve entered another bear market for bitcoin. In case you’re wondering: ‘Bull’ and ‘Bear’ are used in the financial world to illustrate the animalistic nature of investors. Enthusiasm and upward price movements resemble a bull, which is thrusting its horns upwards. Pessimism and sinking prices however are more like the paws of bear striking downwards.
Here’s our guide for dealing with Bitcoin bear markets.
This one is as simple as it is important: Don’t panic.
With crypto hedge funds like Celsius blowing up, politicians advocating for bans on Bitcoin, and bears calling for ever-lower prices it’s easy to forget that nothing has changed about Bitcoin’s fundamentals. No matter the pressure, Bitcoin can’t go bankrupt as it is not a company (unlike nearly all other cryptocurrencies). It won’t go away any time soon. In fact, the adoption rate of Bitcoin is constantly rising.
So don’t overreact. Don’t get too pessimistic, or also overly ecstatic. Don’t try to time the market – you’ll most likely end up stressed and disappointed.
Get your finances in order
This might seem a bit odd as it’s not directly related to Bitcoin, but hear us out: As this downturn affects all asset classes, including stocks, plus we’re witnessing record consumer price inflation, it’s important to get your financial life in order.
This is especially important when you have little money. Do you really need a second video streaming service subscription? Can you replace an expensive hobby with something that is cheaper? Instead of looking at price charts, you can use your time to get an overview of your household budget. This way, you easily get a grasp of where you can cut back – and how much money you got left to save in bitcoin.
Keep stacking sats
After you calmed down and got a clear picture of your expenses and income, it’s time to assess how much money you have left to save.
Especially in uncertain times, it’s key to be honest with yourself. You shouldn’t save/invest more money than you’re comfortable with. Invest only what you don’t need. With Relai, you can start with as little as 10 EUR/CHF and for example, regularly buy bitcoin with a savings plan each month or week.
Yes, we know that we’re a Bitcoin-only company, but still: Diversification is something you should consider, especially in times like these. We don’t mean that you should split up your money between the thousands of other cryptocurrencies out there. But you could for example look into investing in stocks, ETFs, gold or other precious metals.
This is by no means investment advice and we don’t want to point to specific investments. Just know that by spreading risks across different asset classes is worth looking into.
Relax and take care of yourself
Our last recommendation brings us back to the first one: Relax and don’t panic. Spend time with your loved ones, work out, eat healthy, read a good book. Instead of worrying about politics or the price of bitcoin, learn a new skill, start a fulfilling hobby, continue your education. You can, for example, learn about Bitcoin with our e-book.
One of the most important aspects of investing and saving up money is that you zoom out, ignore the noise and look at everything with a very long time horizon.
While there are no guarantees, times of uncertainty have historically proven to be good entry points.