Tips for investing in cryptocurrencies in a bear market

Investing in cryptocurrencies can be a daunting process, especially during a bear market.

Atdominance of bears, traders usecertain strategies that allow them to survive even in difficult times of market downturn, including shorting, HODL, constant investing and portfolio diversification.

Since the advent of Bitcoin, investorslearned how volatile the market can be. Throughout the entire existence of cryptocurrencies, bulls and bears constantly replace each other, and no one is able to predict or prevent their dominance.

The most incredible growth ever seenin the cryptocurrency market, occurred more than two years ago. Those who invested before the bullrun – got rich, and those who invested during – lost their funds. This was facilitated by the largest market collapse in the history of cryptocurrencies, which has not been able to recover to this day.

Now, according to the forecasts of many experts, it has comeIt's time for another bullish rally. However, this has not happened to this day. Considering the situation, investors have developed a number of strategies through which they survive during bear markets, making a profit, or at least without losing their savings. Next, consider four strategies that work in such a situation, namely:

Short sales

Short selling, or "shorting", works on the basistraders' predictions about a market decline. If the prediction is correct – they benefit from it. This is a strategy that works across different markets and is not limited to just cryptocurrencies. The most famous example is when an investor named George Soros made almost $1 billion by predicting the fall of the British pound.

Short can be a pretty effective way.profit through CFDs or derivatives, as well as margin trading. Thus, traders trade assets that they do not even own, while borrowed assets are sold at current prices.

If the market moves and the price of an asset falls, theirthe position is growing. The next step is to buy at a cheaper price with a possible profit taking. Among platforms with support for margin trading are eToro, Bitmex, Binance and others.

Short positions can also be used tohedging goals. If you hold a large amount of BTC, then you can open a short position, thus reducing volatility. For example, traders who had an open short position for 25% of their assets in BTC would lose only the equivalent of 50% in dollars upon the collapse of Bitcoin.

Hodl

HODL– a strategy that implies that investors will not sell their coins even if the market goes negative.

The term is a trading strategy,which is used by those who are willing to wait. This is a long-term strategy, as well as the philosophy of numerous investors. According to Hodlers, it is better to wait until the bulls come to the market, and when the market stabilizes, they will receive a reward for trusting cryptocurrencies.

HODL has become part of cryptoculture, and the strategy has received great support from global investors. The strategy has great potential and can work in other markets.

Of course, it is impossible to predict the future.However, popular investors such as Jay Smith believe that HODL – the best option. He even commented on this belief, saying that he is convinced that cryptocurrencies will replace the old stock markets and change the world. They will power machines, IoT, control systems, voting systems, and perhaps even the Internet itself. While he admits it will be years, maybe even decades, before that happens, he is still convinced that cryptocurrencies – this is the future.

Buy cheaper, sell more expensive

Naturally, investors always strive to getprofit. Therefore, when the value of cryptocurrency falls, many of them decide to sell coins. Only a few are willing to take risks and continue to buy, even if the price continues to fall. Most people buy near the top and sell near the bottom.

While some investors are sellingdue to panic, others seek to average the price by purchasing. As always, any investor should do in-depth research before purchasing any coin.

Portfolio diversification

Finally, don't forget about the possibilityportfolio diversification. It is impossible to predict the future of the crypto market, and any investment – it's a risk. However, investing in different coins will increase the chance of making a profit.