No matter how bad bear markets might seem, they are actually acceptable in any industry. The main benefit of bear markets is that they give time for the market to calm down and settle at an acceptable place after a bullish run (which we saw and price needed to settle), and also make sure that the high volatility that scares away many investors is reduced in general.
Bear markets also had enabled developers to innovate, build and structure the crypto industry, making it one of the viable investment options available.
Bear market is characterized by notably lower prices as opposed to what investors are used to. This brings significantly long periods of low prices in the market and very low activity generally. During this period coins are highly discounted and trade at much low prices.
Bear markets are brought by many factors, in crypto they are hostile market conditions, low activity and FUD. Bearish period reduces trading as many investors are not willing to participate or even sell their held assets to avoid making big losses.
Not first Time
Bear market are not new in the crypto world, they have come before too like seasons. If we look at 2017, cryptocurrency took a really bullish ride, surprising many with its popularity and return on investments.
People got crazy about cryptocurrency, doing whatever they could to benefit from the best bullish market ever. Taking loans, selling property and any other way of getting money to invest in crypto industry was the trend then, all wanted to be rich and there was a way. That was 2017 and earlier part of this year.
Now let’s look at a while back. From November 2013 to early 2015, there was a severe drop in Bitcoin’s value, almost 86% slide. BTC was trading for $115 in 2015, from a previous trading price of $1163 in 2013. Newbies and critics in the crypto world were fully convinced that Bitcoin was dead (RIP BTC).
Investors become Moneymakers
However, those few who really understood the market dynamics and believed in cryptocurrency knew that it was just a bad season, that the coin was worthy of holding on to. They took this as a rare chance and a good time to fully swing into the crypto industry. Going at $115, those who took the chance and bought Bitcoins at that period and remained patient were making whopping 20,000% profit by December 2017.
From the trend, no one would believe in buying Bitcoins at $115 and selling it at $20,000 later. That is the effect of Bear market. When the time for recovery comes, it benefits the real risk takers, and the doubters are left out crying and yelling regrets. In 2017, from April, Crypto was in a bullish trend, with the biggest Bull Run coming ahead at that point. Everyone was interested in the business.
New Cycle upcoming
A few months later, the industry started to drop. It dipped by almost 90%, in the case of ETH, the current price of $120 for ETH, down from $1400 at the beginning of the year. The current bear market is one of the worst because most investors invested during the previous bull market anticipating high returns. Now all of those are at real losses up to 90% loss.
Most of them have exited the market citing volatility and market dynamics unbearable. They have given up on crypto business and stepped aside to study the consequent trends again. Now the ones better placed for the next Bull Run market are those that will take the risk now and accept market dynamics which runs in cycles of bearish and bullish time.
Bear markets have a positive side to the crypto and blockchain industry as follows:
- Bear markets allow for accumulations. Those with good knowledge of trading and real interest in crypto industry know that bear markets are only a test of time. After a bullish run price has to stabilize itself for next run which takes time and it’s currently going through this stage of accumulation.
- Bear markets are a perfect time to learn. During the Bull Run market such as in 2017 and early 2018, it was very difficult to take time and study the crypto industry as everyone was busy monitoring profits and returns. Bear markets have given time to learn skills such as technical analysis and focusing on other moon-bound coins and knowing more about crypto.
- Bear markets led to the elimination of bad coins from the market. Bad coins usually die early during bear markets removing the froth off it. Scam coins are not meant to survive this period, Also the Ponzi schemes go down very fast and get a very hard time to get up even when the market picks. Now this is a very good time to know the real legit coins and avoid the other bad coins and scams.
- Bull Run turns out to be the strongest after bear markets. As indicated by statistics and history. This means that investments made during the bear market always results in fast returns. It is also observed that the longer the bear market, the stronger the following Bull Run hits. This is attributed to investors’ psychology where they all fight not to be left out.
- It removes traders and Speculators These are moneymakers or profit seekers who have no real interest in crypto, they come just to make money, They are not much good for crypto market. Crypto need investors who really care about this field and are willing to take it to broader base, Traders on the other hand only wants profit with no real support to the industry. With bearish markets profits dwindle and loss rises causing traders and speculators to runoff for good, allowing real investors to get in at highly discounted prices.
How it can be profitable –
Crypto market is at low currently, lot of good coins are trading at discounted prices, BTC at 5X, ETH at 12X, and many others at 20X-30X. Market is not dead and with new projects coming up it’s here to stay, so you should also study it now and then get a chunk of good coins at less prices, if you bought at high than you can buy now and get your BE price much lower. Investing currently will allow getting big quantity of coins at a low price which can be profitable even in a short bullish run.
Once again remember investors saying “invest what you can risk loosing”.