[dropcap]N[/dropcap]ot long ago, celebrities were stumbling over each other to promote logos from blockchain companies and expensive digital art. Pension funds for retirees and some 401(k)s showed acceptance for Bitcoin and other cryptocurrencies. Small-to-giant companies have been welcoming digital coins with open arms and adopting them into their payment strategies, with others looking forward to doing so.
When cryptocurrencies’ prices fall from their highs because supply is greater than demand, the “crypto bear market” can sound frightening to some investors. However, this isn’t the first crypto winter; the last one ended in 2020. Seasoned investors know that drops are only natural, and some look to buy the dip while waiting for the bull market to arrive.
The bear market in 2023 brings about great opportunities in any sector and can benefit investors on the verge of venturing into the crypto market.
The advantages of crypto winter
To better understand why this crypto winter is beneficial for newbies who want to enter the crypto market, let’s analyse a situation from 2008 showing that usually, some bargains are of good-quality and waiting to bring rewards.
The US economy started to falter in 2008. However, Warren Buffet began to invest in companies like Goldman Sachs, Bank of America, and Dow Chemical. While some investors were sceptical and opted to play on the safe side, he, the chair and CEO of Berkshire Hathaway and one of the greatest investors of all time, gained profits of over $10 billion when the market recovered. He’s now known for buying undervalued stocks and holding them as long-term investments, and he clearly has sound financial thinking.
If you’ve liked this story, you’re a crypto enthusiast and want to have your own Binance account, check out how to buy Bitcoin; it couldn’t be easier than that. You open up a free account and choose a payment and storage method among several. Then, check Bitcoin’s price (since it’s the #1 cryptocurrency) and the prices of other renowned digital coins like Ethereum, BNB, Solana, etc. If the prices were too high, now’s the time to buy the dip.
Low prices call for long-term investments
Its wild volatility is among the most thrilling and frustrating aspects of crypto. While cryptocurrencies appeal to investors thanks to their capacity to quickly and drastically increase in value, they’re also subject to unpredictable crashes. In some speculators’ eyes, this boom/bust dynamic makes digital currency the ideal asset for buying low, selling high, and making a quick fortune (or buck, as the case may be). But seasoned investors know that getting rich often requires a disciplined approach and long-term planning, as it doesn’t typically happen overnight.
The first step in creating an investment plan is understanding crypto’s situation and establishing your investing timeline. Determine the rest of your financial picture before rushing to add digital assets to your investment portfolio. As a newbie, you might want to buy the most hyped cryptocurrencies, but you must consider how it increases the risk.
Oppositely, mixing several cryptocurrencies can lower the risk as your portfolio gains more exposure. When one coin is down, the other will likely be up, and vice versa.
A long-term horizon helps you to make unbiased and researched decisions and doesn’t allow your investment to be influenced by market movements.
“Should I buy the dip?”
It’s normal to have second thoughts about crypto when you look at their performance over the last year. Historically, around this time can be one opportunistic moment to get cryptocurrencies, where downside risk is reduced, and upside potential maximised. Past data suggests that holding crypto for a longer period is a safe choice if you want to buy today.
However, no one and nothing can guarantee profits, so make mindful choices and don’t invest more than you can afford to lose. And even though you can buy and sell crypto 24/7, you should consider the stock market trading hours because they can affect crypto trading.
It can be tricky to time the crypto market owing to its volatile nature, but some periods are better for buying than others. Just like with any other investment, you should be aware of the market conditions and your risk tolerance. Determine your risk tolerance by watching crypto market trends, forecasting your cash flow, and using the dollar-cost averaging rule.
The “get-rich-quick” mentality isn’t the healthiest
Some believe there’s some elusive shortcut to wealth. Whether it’s the Hollywood nonsense sold as entertainment, today’s financial experts pitching ten stocks under $10, or the 15-second TikTok attention span, you should be wary of the snake oil merchants of crypto.
There is no secret formula to capitalise on the crypto bear market, but there are some guidelines to raise your chances of success. Because this sector is more volatile compared to other industries, investing in it can feel like a marathon instead of a sprint. There are stories about traders who got rich overnight, but it’s unlikely to hear actual stories like those. The crypto market today offers opportunities, but in the long run.
Research shows that doubling returns is possible when investors hold steady for over ten years instead of being inconsistent in their efforts. Thus, it’s better to create a long-term strategy before venturing into the crypto market and not approach it with a “get-rich-quick” mentality. Taking advantage of market opportunities is possible by using common sense and being patient with your investment portfolio.
Great mental discipline is necessary because crypto’s value fluctuates. The money you won’t need in the following years is the money you should invest. Don’t make crypto purchases with the cash you need for your next rent; be disciplined. This also means you should avoid panic selling when prices drop.
Risk is different from market volatility, so try to stick to a well-made plan despite the angst you feel when the value of your assets falls. Be patient and separate your investment decisions from your emotions, as it’s normal for the markets to go through bear and bull regularly.
All in all, the best time to buy cryptocurrency is when you’re ready to invest. If you have some money on hand and don’t know what to do with it, the “crypto winter” might benefit you.
