Investing in Crypto During a Bear Market. What Do I need to 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 from the start of the pandemic to the present.

Every day there are more people who decide to start investing in cryptocurrencies by opening an account in an exchange or in a virtual wallet. And, the number of entrepreneurs who invest in the crypto market with their new ideas is increasing day by day.

It is estimated that ten percent of the world’s population have invested in cryptocurrencies globally, about a billion people.

Investing in the Current Market

Presently, we find ourselves in an economic moment of uncertainty at the international level. This is the result of various geopolitical conflicts, wars, energy crises, inflation, and now, a looming recession in multiple countries.

Recently, there has been a significant drop in prices in traditional economic markets. This is been mirrored in the crypto market as well.

The most common questions asked by market consumers are, how can we survive the crypto winter? What are the best cryptocurrencies to acquire?

Expert Opinion

Renata Rodrigues, Global Community and Education Lead of Paxful says, “We’re in a stressful economic time. But this is also an opportunity for companies in the ecosystem to zoom out from the short-term focus and clean the ecosystem from projects that put people at higher financial risk. Bitcoin has proven itself as a strong alternative financial option and we’re committed to its utility.”

Nicolas Tang, Director of internal communications 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 has cemented its status and perhaps even outgrown the description of an altcoin. If you’re choosing a newer coin, make sure you perform all the necessary due diligence and research. Promising projects have dedicated and talented teams with long-term vision. Ask yourself not only whether a project has utility or solves a problem now, but whether it will continue to do so five or even ten years from now. Don’t be swayed by fleeting trends or flashy marketing. ”

Nicolle Pabello, Managing Director from Latam Amber Group, says, “Focus on the major ones, like Bitcoin and Ethereum, from which we have seen enough market validation. In Amber we believe in building for the long term. It’s very important for us that our clients understand the natural volatility that comes within the industry. And, to prepare for market cycles such as the current one where the price dropped drastically.”

Investing in The Right Projects

The experts of the above exchanges recognize that it is a crucial moment where 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 that if 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 a natural hedge against these problems.”

Investing in Crypto Winter

The crypto winter has strongly impacted the crypto market. There is no golden rule or magic solution that gives the average investor immunity to any market downturn. However, before investing, think about these steps.

1. Analyze the type of cryptocurrency I am going to buy

2. Study the Whitepaper of the project.

3. Investigate who is behind the project that supports the cryptocurrency.

4. Analyze the market capitalization of the cryptocurrency.

5. Read the graphs and price variations of the last few months.

The fundamental pillars of the crypto ecosystem such as decentralization and anonymity have begun to change the traditional economic forms.

As the market cap of cryptocurrencies increases, the corrections of the crypto market will mimic the declines and corrections of the assets in traditional financial markets.

However, investing in crypto during a market downturn can have advantages that other traditional investments don’t offer.

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