Bear Market Strategies & Eliminating The Element Of Surprise

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13 Jan 2025

Will Crypto Investors Be Better Prepared?
I remember the previous bear market as if it was yesterday. I also remember how many market participants remained bullish until the final months of the bear market. In other words, they continued buying throughout the bear market and then finally flipped bearish when they should have been turning bullish. My stance was simple, short the market until BTC breaches the $20K level and then wait for a bottom formation to be established.
My bear market price predictions were on target and accurately called the bottom in September 2022. It’s difficult for investors to face the reality of a market transition, especially when the transition is not in their favor. However, it’s a tough decision that must be made without emotional sentiment or bias. Being prepared regarding a pre-planned strategic approach is one way to make this decision easier.
Once a plan is lined up, much of the battle is won. Investors battle to transition into a bear market because they have not prepared for it. They prepare for a bull market by buying and accumulating assets earlier on. However, regarding a bear market, there is no plan or predetermined course of action. This is half the problem. When you have a plan, you automatically look for the appropriate time to deploy it.
Preparation Provides Clarity
I addressed the idea of pre-planning your exit strategy in a recent post, and how each investment requires an exit plan. Not all assets are equal regarding when and how you plan to exit. In specific cases, an exit can be overruled for tax or income-generating reasons. However, whatever the strategy, each asset or allocation requires its unique plan and course of action. It’s vital, once you apply this in practice, you will understand just how crucial it is to be prepared.
The strict planning of strategic responses creates a level of clarity. It brings everything into perspective and causes you to be on the lookout for certain signs and market behavior. Furthermore, an investor can also choose to average out of the market similarly to dollar-cost averaging into the market. My biggest issue with investors in 2022 was that they were the same in a bear market as in a bull market.
This makes very little sense, but it was common practice. Your behavior in a bull market must differ from that of a bear market. You don’t wear Summer clothes all year round. Seasonal changes require behavioral changes, it’s that simple. As mentioned, certain instances require a break with this school of thought. However, it doesn’t often occur. In many cases, an exit is the appropriate course of action.

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Altcoins have shown how sensitive and fragile they are during a BTC downturn. Even if BTC experiences a mild bear market of 40% to 60%, altcoins will still bleed quite badly. This must be factored in, regardless of whether this cycle extends beyond the usual time frame. As long as the plan is ready, the clarity is there. Being prepared in this regard will help mentally and emotionally prepare for a bear market scenario when it does arise.

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Final Thoughts
The fact that BTC can correct by 20% during one of its most bullish chapters should speak volumes regarding a future bearish outlook. It’s always better to be prepared. You will also find that it enhances your perspective and creates a more realistic outlook. Regardless of when the market turns around for a deeper and prolonged bear market, the prepared will be in a more favorable position to act appropriately. All the best! See you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.