Bear markets and market corrections are a normal part of the investing process, and there’s no need to panic when they happen. Once you grasp the differences between both, it’ll be easier to navigate them when they come up.
In general, the best way to navigate a bear market is by having a long-term perspective and staying disciplined with your investment strategy. And if you’re feeling extra cautious, there are strategies like short-selling and buying put options that can help you profit from a falling market.
During economic expansion, mostly all price declines will be temporary pullbacks or corrections. The trick is to stay invested in cryptocurrencies during such corrections. Since primary trends are likely to be bullish when the economy is expanding, prices will tend to follow by eventually climbing to new highs. As with stocks, cryptocurrency prices rarely move up or down in a continuous straight line. Rallies are likely to be met by consolidation periods, wherein prices move sluggishly in either direction or through market corrections.
Out of the two, bear markets have a higher risk of destroying your investment portfolio, so it’s essential to learn how to spot a bear market before it happens. The first step is always determining where the economy is at — this way, you’ll know how to react when prices start to fall.
If you’re unsure whether we’re in a bear market, the best thing you can do is stay diversified and continue following your investment strategy. By staying diversified, you’ll be less likely to lose everything even if the market crashes. And by following your investment strategy, you’ll know when to buy and sell regardless of market conditions.
Source: Cointelegraph