Bitcoin and Ethereum are two examples of cryptocurrencies that are experiencing steep price declines. What should investors do, and how long will the Cryptocurrency Bear Market last?

Many genuine cryptocurrency fans were astounded by the speed and scope of the 2022 crypto market meltdown. However, such dramatic and protracted falls, also referred to as “bear markets,” are a natural and inevitable element of investment.

But in situations like these, and as long as we strive to remain calm, emotions can have a big impact on how investments turn out. Let’s look at managing crypto bear markets, making long-term investments carefully, and buying cryptocurrency if you want to increase your holdings.

 

What is a Bear Market?

A market or asset is considered to be in a bear market if it has dropped by more than 20% in a brief period of time, according to Brian Mozoff, CEO of the cryptocurrency investment business Ether Capital. Within Toronto. Given the collapse of the crypto market, he continues, crypto definitely meets that criterion.

But this downturn is not just affecting cryptocurrency. Technology stocks, many of which have lost 50% of their value from their 40% this year, are leading a widespread sell-off that is currently taking place on the stock market.

It should be remembered that numerous cycles of erratic price swings have occurred with many cryptocurrencies. For instance, Bitcoin (BTC) is down more than 70% from its peak of almost $67,000 in November 2021. In a similar vein, the most popular altcoin, Ether (ETH), has decreased by more than 65% from its $4,847 peak.

 

We’re in a Crypto Bear Market Currently

It should be noted that, as of October 25, 2022, Bitcoin is under $20,000, and prices seem to be starting to rebound, but I would say that cryptocurrencies are now in a bear market.

Despite this expansion, the bitcoin industry is still well below its peak in 2021. Since its $3 trillion peak, the value of the global cryptocurrency market has decreased by more than 60%. Its estimated value on September 8, 2022, was $1.03 trillion.

Bear markets in the cryptocurrency industry have previously occurred in 2011, 2013, and 2018. The duration of the current bear market is uncertain. It can be challenging for both novice and seasoned investors to anticipate the market’s bottom and execute trades at the ideal moment, but this is the right time to “buy the dip.”

 

What Causes a Crypto Bear Market 

Due to a number of issues, including rising inflation, restrictive central bank activities like this year’s aggressive rate hikes, economic ambiguity, and geopolitical dangers, the bitcoin market may result in stock market falls.

Many investors are choosing to wait out the crypto volatility on the sidelines, especially while central banks keep raising interest rates. Whether it’s a mortgage or they simply need money, “those who have a lot of debt are looking for cash to be able to pay off their bills and meet their responsibilities.”

The sharp rise in cryptocurrency prices is another element causing the present bear market. BTC was about $7,000, and ETH was about $130 at the start of 2020. By Q1 2021, ETH had increased to $3,500, and BTC had risen to $63,000. According to Mozov, “these high multiples indicate that prices were anticipated to decline.”

According to him, investment involves taking money off the table and securing earnings as crypto cycles move from one to the next.

For investors, what does this mean? It is wise to concentrate on cryptocurrency fundamentals such as increasing developer activity and adoption of cryptocurrencies – and taking a long-term view of their usefulness and applications – given that a bear market is a transitory phase.

 

Illustration of a crypto market chart

Illustration of a crypto market chart

 

Why Invest in the Crypto Bear Market?

Both newcomers and seasoned market participants may become fearful during a bad market. However, it also offers a chance for “bystanders and those with additional money to buy assets at a discount”.

If you currently own bitcoin, purchasing more of it at a discount lowers your average cost base but increases your chance of financial loss.

The investor’s time horizon and willingness to bear the volatility are the factors that actually matter, and buying these crypto assets should be viewed as a long-term investment. Investors who regard their investment as long-term are likely to perform well and buy back those assets at a favourable entry price.

The fact that cryptocurrencies are still a new asset class and technology is to be taken into account. It’s yet unclear how completely new crypto platforms and protocols will change the face of digital money. We concentrate on developer activity and development,” adds Mosoff.

“Despite the negative market, we have heard reports of [decentralised network and blockchain] developers quitting the cryptocurrency industry, throwing in the towel, and submitting their resumes to conventional financial institutions. No, he replies.

The fact that cryptocurrencies are still a new asset class and technology is to be taken into account. It’s yet unclear how completely new crypto platforms and protocols will change the face of digital money.

Despite the negative market, we have heard reports of [decentralised software and blockchain] developers quitting the cryptocurrency industry, throwing in the towel, and submitting their resumes to conventional financial institutions.

Overall, it is a good idea to invest in the crypto bear market now.

 

How to Invest in Crypto Bear Market

Analysts advise concentrating on long-term goals and continuing to diversify your portfolio to avoid falling victim to a bear market, even though no one can anticipate the path of the crypto market. During bad markets, diversification helps distribute risk among several assets. Really, it all depends on the individual investor and what makes them feel most secure. Emphasises – “don’t leap into sloping postures”.

Gaining exposure to cryptocurrencies has no right or wrong answer, but it is advised that you should think about what is best for you to do. In both bull and bear, you have to examine what is most suitable for you to be in.

 

Which Cryptocurrencies Perform Best During a Bear Market?

Investigate your alternatives if you’re thinking about investing in cryptocurrencies. There are a few undoubtedly valuable assets, much like Bitcoin and Ethereum.

Since its launch, Bitcoin has been the most valuable cryptocurrency by market cap. It has been around for more than ten years. The second-largest cryptocurrency, Ethereum, which debuted in 2015, is due to receive a significant update. The crypto economy will probably depend on these two assets for many years to come.

Other cryptocurrencies with promise include Cardano, Avalanche, and Solana. However, they haven’t yet demonstrated their long-term viability. Other smart contract platforms (including Ethereum) and other assets in this field have undoubtedly seen a lot of fascinating growth and activity. However, new assets still have strong developer communities and infrastructure.

It is recommended investors concentrate on BTC and ETH and turn to other assets after taking stakes in blue-chip stocks. The volatility of Bitcoin and Ethereum is the same. Just that when we start the next cycle, prices are most likely to increase. The coins with good credentials recover the quickest and are the highest as the wave of volatility recedes.

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