trade strategies
How to trade in a crypto bear market — Trading tips and strategies that make profits
How to trade and make profits in a crypto bear market
The crypto bear market is very unforgiving, and in that sense, we mean it is very volatile and unpredictable. You can have all your indicators and horizontal lines in place, but it’s still not a guarantee that the bottom is in. You can always buy the dip, but the fear of your buy order being invalidated by a lower low is real.
Now, what is a bear market?
A bear market is when there is a 20% drop in price followed by an increase in fear as we have many bearish sentiments. This definition was coined from the stock market, which is regulated and less volatile, so they experience a bear market once in a few years. Hence this definition might not be entirely adapted into the crypto markets.
Due to history and the bitcoin halving, we are not in a bear market yet. What we are seeing is consolidation in price. This is when a cryptocurrency trades between a range. This means that bitcoin goes sideways, neither goes up or down, just hitting particular support and resistance.
Now in the case of bitcoin, which has seen a 50% drop in price and is currently trading between the $41K and $30K range. We can also see this same downtrend in altcoins due to their bitcoin relationship and them being valued on their bitcoin exchange rate. Since the crypto market consists of 40% of bitcoin, this makes it the crypto with the largest market cap. The main point is more adoption for bitcoin means more adoption for altcoins. So less market volume in bitcoin means less market volume for altcoins.
Nevertheless, it is essential to know that bitcoin is experiencing a short-lived bear market, but in the long term, the basis is still very much bullish. Fundamental analysis will tell you there has been a lot of FUD clouding the sentiments of traders, but the technical analysis will tell you it was bound to happen. Remember, the bigger they are, the harder they fall.
Now the next course of action for most traders, experts and beginners alike would be what strategies do we take to survive the bear market and here I have a few I have tried and tested that have given me profits.
Tips and Strategies for trading in a bear market include:
- Do nothing
It is the most straightforward strategy for making profits in a bear market but not the easiest. Deleting trading apps, crypto wallets and muting any cryptocurrency-related words is a way to not only distress and move away from the anxiety and fear that comes with trading in a bear market, but you can take up other hobbies, exercise, focus on your job, spend time with friends and family and discover yourself out of “bitcoin revolutionizing the world”, and have fun. This is a bear market trading tip that will not only give profits but leave you feeling relaxed as you wait for an easier market to trade.
2. Learn technical analysis
Since you have decided to actively trade in a bear market, do yourself a favour and learn technical analysis. Go through the basis for interpreting any chart like support and resistance lines, trendlines, moving averages, volume, RSI, MACD, Bollinger Bands, Ichimoku and Fibonacci. These indicators can be found on any trading chart, and they are one of the most powerful trading indicators because the more popular an indicator is, the more accurate it is.
Studying these basic indicators can improve your skills by practising and journaling your technical analysis journey, like knowing what works and what doesn’t, what time frame goes best with a particular indicator, what to use for short-term or long-term trading strategies and any other observations you find, should be recorded. It will speed up your learning process and make your entries and exit strategies much more successful.
It is important to note that learning how to trade in a bear market is not easy, but it makes your chart reading skills much sharper. So don’t be afraid and spend at least 3 hours per week perfecting your technical analysis skills for easier markets.
3. Buy past gems
Remember those coins you couldn’t afford during the bull run? Well, you can afford them now. That’s one of the upsides to a bear market, and you can get every coin at a low price and hodl till the next bull run. To do this, you need to go on a popular exchange like Binance or Kucoin, go through the coins with huge trading volumes and market caps, open each coin’s chart, zoom out and look at the coin’s price during the previous bull run. If a coin can go from $1000 to $10 in a bear market, it can also go from $10 back to $1000 in a bull market, all you need is patience and buying the dips on coins with strong fundamentals. Also, if you want a larger variety of coins to choose from, you can check Coingecko and Coin market cap and use the strategies above, but you have to be more careful and look out for extra things like circulating supply, founders and tokenomics to avoid pump and dump coins.
4. Build strategies with trading psychology
The first time I started trading crypto, I didn’t know squat about trading, charts, strategies, indicators and all that crypto jargon. I was able to make a considerable amount of profits with the help of psychology. I knew coins with whole numbers for support were likely to pump than those coins with odd numbers. I bought coins with large dumps or sell-offs because people were weary, and I could make fast profits when they pumped hard, I started by buying popular coins with large trading volumes, and I never traded on weekends because they are the dip-buying days.
In a bear market, these strategies would get me rekt, but in a bull market, it was easy and gave me a considerable amount of profit before I learnt technical analysis, fundamental analysis and eyeballing was my only trading strategy.
Every trader banks on human psychology to trade effectively. Using trading indicators with these psychology tips and tricks will make trading in the bear market less stressful and trading setups easier to understand.
4. Scalping or swinging
You must know your limits and what gets to you. Depending on your schedule and patience level, you should know the type of trading strategy that works for you. I scalp my bear market trades if I feel the markets are too slow for that day, but I still maintain my swing trade positions. Scalping will require you to take on a lower time frame like 1hr and 4hr, but swing trading timeframes range from daily to weekly.
For me, I find swing trade easier. I open my long positions at support and never look back until my resistance is met, and when that happens, I short it to support level. I never hold on to a coin even if it breaks through the resistance, most times, these are fake breakouts, and I control my greed and take profits where my resistance lines are placed.
Also, risk management is essential because you need to preserve your capital jealously. It is better no profits than to get losses, so always build your trading strategies with well-timed entries, exits, and stop losses to preserve your capital and avoid losses.
5. Time to try futures trading
The final strategy is to consider futures trading, this type of trading needs you to be good at technical analysis. Futures trading is one of the trading methods that lets you leverage on a coin that in a downtrend, unlike spot trading, where you can only buy, hold and sell, with futures. You predict a price you are sure the coin will reach and then make your profits. I mentioned it last as leverage trading is risky and should be done after you have familiarized yourself with all the trading basics and you have experience trading.
If all these strategies and tips are too much work for you, buying the dips now and waiting for the next bull rally could give you astronomical profits, just don’t FOMO in and avoid the FUD.
