Investing in crypto during a bear market. What should I know?
Investing in crypto during a bear market has its advantages. Here’s how to get around a stagnant market.
The cryptocurrency industry has proven to be one of the fastest growing industries since the onset of the pandemic until today.
Every day more and more people decide to start investing in cryptocurrencies by opening an account in an exchange or in a virtual wallet. And the number of entrepreneurs investing in the crypto market with their new ideas is increasing day by day.
It is estimated that ten percent of the world’s population has invested in cryptocurrencies globally, or around one billion people.
Invest in the current market
Currently, we find ourselves in a moment of economic uncertainty at the international level. This is the result of various geopolitical conflicts, wars, energy crises, inflation and now, an impending recession in several countries.
Recently, there has been a significant drop in prices in traditional economic markets. This is also reflected in the crypto market.
The most frequently asked questions from market consumers are, how can we survive the crypto winter? What are the best cryptocurrencies to acquire?
Renata Rodrigues, Global Community and Education Manager at Paxful, said, “We are going through tough economic times. But it’s also an opportunity for companies in the ecosystem to step away from the short-term goal and cleanse the ecosystem of projects that put people at higher financial risk. Bitcoin has proven to be a solid alternative financial option and we are committed to its usefulness.
Nicolas Tang, Director of Internal Communications at Phemex, says, “The best altcoins to invest in during bearish conditions are those that are well established and have stood the test of time. Ethereum, of course, is an example of a project that cemented its status and perhaps even surpassed the description of an altcoin. If you choose a newer piece, be sure to do all the due diligence and research. Promising projects have dedicated and talented teams with a long-term vision. Ask yourself not only if a project has a utility or solves a problem now, but if it will continue to do so five or even ten years from now. Don’t be swayed by passing trends or flashy marketing. ”
Nicolle Pabello, Managing Director of Latam Amber Group, says: “Focus on the major ones, like Bitcoin and Ethereum, of which we have seen enough market validation. At Amber, we believe in building for the long term. It is very important to us that our clients understand the natural volatility that characterizes the industry. And, to prepare for market cycles like the current one where the price has dropped drastically.
Invest in the right projects
The exchange experts above agree that this is a crucial time when the key is to invest in the most consolidated projects such as Bitcoin and Ethereum.
Rodrigo Torres is the director of Valor Analitika. “A key aspect to take into account is whether the person lives in a country with high inflation or high devaluation. They can analyze the option of converting their local currency into a stablecoin such as USDC. This allows them to have natural coverage against these problems.
Investing in Crypto Winter
The crypto winter has heavily impacted the crypto market. There is no golden rule or magic solution that protects the average investor against any market downturn. However, before investing, consider these steps.
1. Analyze the type of cryptocurrency I will buy
2. Study the project white paper.
3. Research who is behind the project that supports cryptocurrency.
4. Analyze the market capitalization of the cryptocurrency.
5. Read the charts and price changes of the last months.
Fundamental pillars of the crypto ecosystem such as decentralization and anonymity have begun to alter traditional economic forms.
As the market capitalization of cryptocurrencies increases, corrections in the crypto market will mimic asset declines and corrections in traditional financial markets.
However, investing in crypto during a market downturn can have advantages that other traditional investments do not.
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