As someone who went through the 2018/2019 bear market whilst completely new to crypto, I had to figure a lot of stuff out for myself in the early days. In this article I’m going to talk through five tips that I wish I knew at the very beginning of that bear market. They weren’t all necessarily mistakes, but they would have been a huge advantage to know. Although you might not realise it yet because you’re still upset about the money that you’ve recently lost, the bear market is a life changing opportunity that you should be utilising to make tremendous wealth.
1) Have a plan for your capital
Starting with a massively important point. You need to have some kind of strategy when entering the market or building positions whether it be for the short or the long term. Waking up one morning and deciding that you’re going to buy $500 of X because that’s your friend told you it will 100x and that’s all you’ve got in the bank is not the play.
Are you going to Dollar-Cost Average into positions on a weekly basis? Are you going to wait for a clear reversal on the higher timeframes indicating a change in trend on a macro scale? Both are valid ideas and they are not the only ideas, but it really comes down to what you personally are most comfortable doing. The bottom line here is that having some kind of plan in place and sticking to it, is going to help massively.
2) Get comfortable shorting
This is much more applicable if you’re a trader, but you need to be comfortable shorting the market. Back in early 2018, I didn’t know if I was a trader or an investor. This is what I figured out over time and one thing I was completely unaware of back then was that you can short assets and bet against them going up.
During a bull market we are playing the trend and most of the time, looking for opportunities to go long. Maybe we buy the dip when it enters an area of support. Valid trading strategy, right? During a bear market we should flip this theory full 180. If we are in a clear downtrend, we should be looking for opportunities to go short. Shorting a retest of a level that has now become resistance… You get the point.
People will sit and pray that their portfolio starts going up again when realistically, we’re in a downtrend and the market is showing no signs of this changing just yet. Rather than refreshing our portfolio and praying, why not utilise another tool that allows us to make money, despite numbers going down?
However, this does not mean that we liquidate all of our net-worth and start shorting every asset like a complete degenerate. If you’re a trader, this is all relevant to your risk management strategy.
3) Be selective with altcoins
So here is the brutal truth with this one… Many altcoins will never recover or reach their all time high value, ever again. This is a natural part of the cycle where teams will give up, communities will dissolve and projects will ultimately fail. In the real world 90% of start ups fail, so why would crypto be any different?
If we look back at some of the big players during the 2017 bull run, we will see that during 2021, they never eclipsed their previous highs. The hype and the attention is no longer on these old, washed up coins. The attention is now on the new shiny projects and this pattern will continue to repeat itself in the future.
4) How will you spend your bear market?
Probably the most important point when it comes to thriving from the opportunity that lies in front of you. This is where you can really put yourself in a position to make generational wealth.
You have a decision to make in regards to the bear market. Do you sell and never look back? Do you hold what you’ve got and check back in a couple of years? Do you refresh your portfolio every night and cry yourself to sleep? Or do you double down and use the time to immerse yourself into the industry?
Before I expand, there is no right or wrong here, but you should decide where to focus your time and energy during a bear market. Maybe you want to spend time with family or focus on your day job, there is absolutely nothing wrong with that however, for those who want to double down in crypto, pay attention…
During 2018 I had no idea what I wanted to do within crypto but I did see a huge opportunity. I used my time to learn, build and network. As a crypto noob, I was learning about the space, about investing, trading and anything else that was relevant at the time. I then started to build my first business in the space using my expertise in user experience (UX), writing articles, creating content and more. I also started to make internet friends and even went on to meet many of these people face to face, building solid connections and friendships with like minded people in the space.
All of these decisions and experiences have put me in an incredible position today and although some people may be thinking, where do I start? All I can say is dive in head first, reach out to people, read books, watch YouTube and see where the wind takes you over the coming months and years. If you’re committed it’s going to pay dividends in the future.
5) Have conviction in your decisions
Having conviction is massively important for any trader or investor. You might be panicking right now. Some will be thinking ‘should I sell everything?’ Others will be thinking ‘should I buy the dip?’ Nobody can tell you with absolute certainty what will happen next, all you can do is position yourself based off your best guesses.
If you listen to the noise and emotions on Twitter, you will likely find yourself changing your mind on a daily basis and that is the furthest thing from having conviction. It’s great to listen to others and their opinions, but don’t make spontaneous and irresponsible decisions based on one other persons thoughts. So many personal factors can play a part in your decision making and that’s why ultimately you have to listen to yourself above anyone else.
The bottom line of this is that market cycles are natural. We was never going to go up forever and if you speak to anyone who has been around since 2017/2018 or longer, they will tell you how patience is rewarded and how much of an opportunity the bear market can be if you’re willing to put the work in.
Personally I will be doing more of the same as I did in 2018. I’ll continue to learn, build and network. Learn more about the space, build portfolio positions slowly overtime and continue to meet many more great people. Remember, this is your opportunity to make generational wealth. Make it count!
Disclaimer: Please keep in mind that the above are my opinions based on my own experiences. What works for one person won’t necessarily work for everyone. All I hope is that something within this article can help!