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Bear Market Survival Guide: How to avoid mistakes and prepare for the next crypto bull Market

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HODL or not HODL, that's the question.

原文标题：《如何避免熊市错误并为下一次加密牛市做好准备》

By Ekin Gen

This article is from wechat official account:Old yuppie

We polled some of the survivors of the last bear market for advice on what to do and what not to do during a cryptocurrency downturn.

Cryptocurrency prices are plummeting, some crypto projects are going bust, many companies are struggling and halting hiring, and "crypto is dead" headlines are making headlines in the mainstream media. Things don't look good.

But those who have been in crypto for a while have seen it all before. Cryptocurrencies are highly cyclical, characterized by bear and bull markets. In a bull market, such as one that begins at the end of 2020 and ends at the end of 2021, prices can rise by double digits each day. In those moments, it felt as if the market was destined only to go up. But in a bear market, prices can fall by 90 per cent, then another 90 per cent, and so on.

While previous crypto bear markets coincided with bullish sentiment in the stock market, cryptocurrencies are now closely tied to the macro environment and a recession may be around the corner.

Opinion: Why is this cryptocurrency crash different

Should you panic? Should you double down? As we enter the depths of the bear market, we have asked the survivors of the last bear market how to stay awake during the downturn, decide and take the right course of action and prepare for the next bull market. They started out as crypto novices, but today they are deeply immersed in it, participating as investors, developers and traders. That's what they have to say.

profit

HODL or not HODL, that's the question.

In cryptocurrencies, despite the doom and gloom, resistance to selling -- hold or hold -- is a common behavior. "Don't risk your lifestyle because of HODL models. No one ever went bankrupt because of profits," Web3 investor Tyler Reynolds told reporters. Making a profit means selling a percentage of the proceeds. This does not necessarily mean a complete exit from the market.

"For your sanity, you better have a portfolio-wide stop if you say you'll sell everything below a certain amount," he said. Most centralized cryptocurrency trading platforms allow users to place stop-loss orders at either a percentage drop (sell Bitcoin (BTC) when bitcoin falls X%) or a specific price (sell BTC at $X).

"Set a sell target/profit level ahead of time, at least loosely, and stick to it. Your objective self of the past is better than your euphoric self of the future," said Cred, a pseudonym trader who offers free and comprehensive technical analysis courses on YouTube.

Avoid panic selling and avoid greed

Profit-taking, and perhaps an exit strategy altogether, does not mean panic selling.

"Avoid panic selling unless you're desperate for capital," says Fedor Linnik, founder of several NFT (Irreplaceable Tokens) projects. Looking back, he said, "greed, fear of missing the top" was a mistake he made in 2018. Make sales decisions based on data, not emotional or social media advice.

Remain solvent

Most people who invested in cryptocurrencies in late 2020 saw their portfolios hit all-time highs in April or November 2021. But the fireworks were over.

"Don't trade or invest with the mentality of 'recouping' what you lost in a bull market; it's an inherently flawed comparison," Cred says.

While it can be tempting to try to "make a profit on a trade" by entering risky trades, retaliatory trades can also easily backfire. Alex Svanevik, chief executive of Nansen, a data analytics company, said that staying solvent was key in a bear market and that it helped not to "touch leverage."

杠杆是加密市场中的一种常见工具，但在下跌的市场中诉诸杠杆购买 Token 「更有可能破产，并会侵蚀你的精神资本，」Cred 警告说。「即使你设法获得了一个很好的入场机会，你有足够的精神去持有这样一个大职位的机会也会大大降低。」

The research project

加密是创新和实验的地方。许多项目突然出现、死亡、重塑自我、成功或从记忆中消失。加密项目通常有与之相关的 Token ，而 Token 通常（但不一定）与项目的成功挂钩，尤其是在早期。

What worked for him during the last bear market, Mr. Reynolds says, was continuing to investigate new and old projects. "As the project moves from the original idea and finds better product market fit, you will need to continue to reinvestigate, such as Aave," he said. "I looked for a core new mechanic that would create a better user experience and used it on multiple projects."

In the last bull market cycle, he explains, the creation of peer-to-peer contract agreements was the central new mechanism. In contrast, those who bet on peer-to-peer agreements "largely lost".

Peer agreements include Uniswap, Aave, Trader Joe, etc. While many peer-to-peer protocols, such as THE NFT exchange protocol Sudoswap, have found market convergence, others, such as the peer-to-peer payment protocol Dharma, have acknowledged the failure of the model.

No one knows what the narrative of the next bull cycle will be. "People who find it and bet on it will do well in the next cycle," Reynolds said.

Participate in the project

Passive research projects are not the only option for those interested in cryptocurrencies.

Many cryptographic projects, especially those built in decentralized Finance (DeFi), are built as decentralized autonomous organizations or DAOs. Anyone can join and participate, and as an added bonus, it can be a great way to get a good job.

"Focus on building and contributing, understanding the core foundation of the ecosystem, rather than the hot topic of the day," blockchain developer Foobar said. Building and contributing helps drive the industry and carries a high premium for having an impact on the ecosystem. It can help you understand cryptocurrencies better, and it can help you build relationships.

Hold an APE fund

「Aping」是加密货币中的常见活动。它指的是在没有太多尽职调查的情况下投资项目 Token ，仅仅是因为 Token 是新的、闪闪发光的，并且很快就会升值。

But Imitation is a strategy more likely to work in bull markets than bear ones, Svanevik says. "Start spending time looking at data and reading projects rather than blindly copying things."

Aping doesn't have to pay for anything legitimately popular and will be attracted to your favorite YouTube influencers. Perhaps a project that aligns with your long-term beliefs will launch or appear on your radar, and you'll want to get to the bottom. "Have an APE fund, which is a small part of your portfolio, that you can use to try out new technologies, new projects, etc.," Cred suggests. "The best performers for the next cycle may not exist or be in the early stages."

Pay attention to the attribution schedule

如果一个项目已经存在了很长时间，那么它的投资者很可能很快就能出售他们的 Token ，如果他们还没有这样做的话。所谓的解锁可以随时发生，包括在熊市期间，往往会压低价格。

"Please pay attention to the attribution schedule to avoid abandonment," Svanevik said.

To build a relationship

Smart contracts, protocols, leading robots... It's easy to forget that there's a human element to cryptocurrencies, a tight-knit community that lives on cryptocurrency Twitter and regularly meets at conferences around the world.

Crypto investor Jason Choi, who joined the industry in the depths of the crypto bear market in 2018, says he's almost "always building relationships, researching and creating content, which has led to huge returns in the future." During bear markets, he says, "a lot of people choose to double down in their industry, so it's often the best time to build lasting, meaningful relationships."

在上一次牛市期间，NFT 因其对社区的重视而在加密领域崭露头角，这是一个在上一次熊市期间不存在的领域。「利用熊市时间进行交流。尤其是现在。在基于 JPEG 的社区中闲逛仍然比 2018-19 年更有趣，当时周围几乎没有价值的 Token ，」Linnik 说。

Save your job

Think twice before quitting your job to pursue your interest in cryptocurrencies. If you have bills to pay, you're better off sticking to a secure job, and your involvement in cryptocurrencies may be a part-time job.

"If you have a job, keep it unless you're absolutely sure you're better off doing cryptocurrency full-time," Cred said. "Especially if you want to be a trader, most people don't actually need to be full-time."

Get a job in crypto

Maybe the point is to keep a job -- but not necessarily your old job. To speed up your crypto journey and earn an income at the same time, consider getting a job in crypto.

Linnik saw the value of his crypto portfolio plummet and had to take a job during the last bear market. That's the work of an NFT startup in 2018. "It failed in 2019, but we are well positioned for the NFT boom in 2020," he said.

While some big companies, such as cryptocurrency trading platform Coinbase, have pulled their job postings at the last minute, many are still hiring.

Live a life outside of crypto

Cryptocurrencies are a 24/7 market. The industry often feels like a fast-moving Netflix show that's easy to take away and ignore the rest of your life.

"Have a hobby, have friends outside of crypto and finance, and read books and articles outside of crypto and finance," Cred said.

But it also applies to your portfolio. Foobar swears by the motto: "If crypto goes up, enough crypto to be happy, and if it goes down, make sure you survive elsewhere."