A bear market can be scary and brutal for investors who have not experienced such dreaded cycles. If you lack the knowledge of a crypto bear market, your emotions can sway you into making trading mistakes. In a bear market, it is not uncommon for some altcoins to lose more than 90% of their value from their all-time highs.
Panicking during a crypto bear market leads to feelings of anxiety and fear, making you lose control over your emotions. This causes you to make impulsive decisions. In such market conditions, you should make decisions based on objective merits. So, avoid panic selling and do not let aggressive selloffs worry you because these are common in a bear market.
This is the opposite extreme of panic selling. Sometimes, it is important to recognize a bad investment and cut your losses. Many investors get too attached to their bags. Hence they choose not to sell despite seeing a complete shift in the narrative and the market’s interest.. You need to be mindful about not getting attached to your portfolio.
They say that the bear market is the perfect time for a long-term investment. However, another common mistake potential investors make is trying to time the bottom. Instead of timing the bottom, you should consider dollar cost averaging your position. This will bring your average entry price closer to the bottom while minimizing the risks of losing the opportunity to invest.
Watching your existing portfolio go down can be emotionally and mentally draining. It will eventually take a toll on your mental and physical health. Remember, no amount of money or crypto is worth putting your health on the line. Take care of your sleep, diet, and physical health as well.
Overtrading, or impulsive trading, is not all too uncommon either. After taking a big hit in their portfolio, investors often try to scalp any short-term rallies during the bear market. However, the market volatility does not really depend on your emotions. Remember that there is no room for your emotions when it comes to trading crypto. The bear market can be brutal, and bull traps are common. Do not let the FOMO get the best of you!
Managing your emotions is the key to surviving a crypto bear market and avoiding taking any further losses. However, mastering your emotions can be difficult. Even the most experienced traders sometimes give in to their emotions, especially when they are desperate to recover their portfolio. So, make sure you invest with a long-term vision and make stronger conviction plays in larger micro-cap coins that are more likely to survive.