There is an insipid taste in the mouths of most crypto traders especially in the current downturn of the entire market. This has got many people into the panic mode of making irrational decisions as observed in the past two months spanning December 2021 to date.
A detailed understanding of how the markets work can undoubtedly put an individual or a trader in an outstanding position when it comes to a reversal of the entire market structure.
What is a bear market?
A bear market is when a market experiences prolonged price declines especially when the market is down 20% for at least a two-month period. It is often accompanied by negative investor sentiment and declining economic prospects. It is observed that bear markets can be cyclical or longer-term. Where the former lasts for several weeks or a couple of months and the latter can last for several years or even decades depending on the kind of market type.
The market is basically represented by two distinct beasts (animals) with a very ferocious attitude and strength such that when either of these animals are in control, it determines the mode and the direction of the market.
A bear market can be loosely defined as a persistently sloping downward line in the market structure of a graphically represented chart. It is observed that investors want to sell their coins and tokens because of fear and anxiety that the market will crash.
However, this often presents an opportunity of a lifetime as some traders have profited immensely from such bear market structures in the past. As we may know, all market structures have a cycle, and the ability of a trader to identify these cycles puts them in a strategic position of profitability.
For the purpose of this article, the three things to do in a bear market are as follows but not limited to the following:
- Overcome fear: Most trading platforms are of the opinion that traders should always trade with funds they are comfortable with and can afford to lose. Though these are not financial advice as every individual trader is responsible for their trades on the trading platform. If such a trader has taken a proper risk assessment, they would not be overcome by fear and would apportion a calculated risk for their trades. This would avert the possibility of panic due to fear.
- Ability to take profits during a bull market: A good trader who understands that markets are cyclical in nature would know when to take profits off the table in a bullish trend in order to avert a heavy loss in the bear market in a dollar-cost averaging strategy. This has proven to be a very strategic method applied by good traders.
- Avoiding selling at a loss: As a result of anxiety on the part of traders who see the value of the positions in the markets depreciating, they are always on the lookout for the possibility of selling at a loss which is always detrimental to their position in the market. Knowing fully well that all markets are cyclical and would always return to their previous all-time high price value is crucial. It is suggested that if you’re a beginning investor, it might be best to buy and hold as you await the reversal cycle.
It is suggested that traders don’t sell their positions excessively at a loss. When a proper analysis is done about the respective coin and token before investing, this can give the trader a level of confidence as to how market forces can determine the success of the project or coin in the reversal of the market structure.
Some projects have shown massive strength in the reversal of market structure over time as such projects defy the suppression of the value of the coin and had a massive rebound to high massive profits for those who showed a strong commitment to the project. Typical and classical examples include Bitcoin which has gone through several bear markets and has defied the market structure to always bounce back to new all-time highs.
In conclusion, a bear market is not a death sentence to any project, especially solid projects with solid vision and massive use cases which are built on a daily basis, such as the Klever ecosystem. Holding Klever tokens, then, sounds like an interesting choice.
