3 tips to survive the crypto bear market

In Trading

Tether, the Bitcoin Cash hash war or just a plain and simple correction? No one knows the true cause of the crypto bear market, but in case the bears don’t go into hibernation this winter, here are a few quick tips on how to survive the bear market.

Don’t “buy the dip”?


Over the past few years, “buying the dip” has become somewhat of a meme in the cryptocurrency space, and depending on your personal strategy and goals, this piece of “wisdom” can be terrible for your bottom line.

In a bull market with a strong general upward trend, traders can take advantage of temporary dips to add to their long positions. Unfortunately, “buying the dip” rarely works in a bear market where major support levels are being broken on a consistent basis.

In the past 48 hours, Bitcoin has plunged through a number of key support levels between USD6,000 and USD4,500. In this scenario, “buying the dip” would’ve likely resulted in significant losses with the possibility of forced liquidation for those margin trading.

If you’re a trader, be patient during dramatic and emotional bear moves and wait for confirmation signals like high-timeframe divergence, key EMA crossings, extremely high trading volume, and double or triple bottoms before entering a trade.

The image below highlights pre-capitulation sell candles before major reversals to the upside. Catching a falling knife in search for the exact bottom is a low-probability trade.

Short the rallies

Instead of buying the dip, shorting upward rallies is usually a higher probability trade. During strong trends to the downside, EMAs often act as resistance levels. Thus, any upward moves up to the EMAs with strong rejections (20-day and 40-day are two that are commonly used) can be viewed as potential short entries.

Margin shorting is available on Liquid for a number of major cryptocurrencies including BTC, ETH, and XRP.

Take a break

This should be obvious, but maintaining a healthy state of being is very important. It’s easy to develop tunnel vision during big market moves. If you find that this is happening to you, do yourself favor and take a step back for a while.

Go out for a hike, catch up with a friend or go focus on another hobby to get your mind off the market.

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If you believe in the long-term potential of blockchain and cryptocurrency, remember that fundamentals have never been more positive in the young history of this industry.

During the previous bear market, the outside world didn't really care about Bitcoin, let alone major financial institutions. This time around, with government and institutional recognition now a factor, things are a little different. With this in mind, it’s completely okay to take a break and disconnect.

During times like these, it’s okay to speculate in crypto, but it’s not okay to speculate on my mental health.

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product.

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WRITTEN BY

Brian Li

Trader, analyst, Liquid contributor. Editor of Decrypto.net.