Bitcoin’s fall from $64,800 in mid-April 2021 to $31,100 in early June may signal a bear market, which means bad news to the general industry but also some opportunities for traders who know what to do in such an environment.
Getting to Know the Crypto Bear Market
After a record-breaking rise for Bitcoin for most of 2021, from $29,300 to start the year to as high as $64,800 in mid-April, the succeeding 60 days up to mid-June mostly wiped off those gains in a massive market correction. As of June 15, BTC returned to above-$40,000 levels, the first time it had done so in the past 25 days, signifying the swiftness of this particular downfall and the potentially long way out of it.
A market that goes through a period of price downturns is called a bear market. It usually involves a vicious cycle in which initial declines in prices cause traders to panic about their positions and respond with their own sell-offs, short positions, or other market exits, triggering a domino effect. During this period, many traders feel “bearish;” in other words, they expect prices to generally fall down some more before things get better.
The recent Bitcoin downturn is not the first bear market crypto has faced. The industry had already gone through harsher winters, such as the following:
- In 2014, Bitcoin fell from $1,200 to $200, falling as much as 86%.
- In 2018, Bitcoin went from a high of $20,000 to a low of $3,000.
- In March 2020, during the overall pandemic-fueled crash in global markets, Bitcoin fell from $9,000 to $4,500 in a matter of days.
Given this history, it is possible for crypto traders to just ride out the bear market cryptocurrency trends and position themselves in preparation for when the market recovers. It is also possible for traders to take advantage of the bear market and still generate profits.
How to Survive in Crypto Bear Market Scenarios
Even in negative market environments, seasoned traders can give you several tips to survive in bear market situations. Some of these tips are general trading principles, while others are special features available in exchanges that offer comprehensive services, like Binance.
- Buy the dip. One of the most commonly cited mantras in cryptocurrency trading, buying the dip means taking advantage of low prices as good entry points in a bearish market. The expectation behind this move is that with prices falling down to a certain point, it will only be a matter of time before prices recover and you get a good profit. However…
- Avoid catching a falling knife. There’s a fine between identifying a true bottom in prices and trying to “catch a falling knife,” or buying a rapidly declining asset close to its recent bottom in anticipation of a quick recovery. Beware that in most cases, these falling knife moves end up hurting your portfolio more. As with any trade, proceed with caution.
- Explore other crypto-earning methods like Binance Earn. There’s more to earning profits in crypto than just trading. Especially in periods when trading doesn’t yield the same returns it used to, crypto earning services such as Binance Earn can give you an alternative way to grow your portfolio. Stake your cryptocurrencies, you’re not trading them much anyway while you wait for markets to recover. Then, you’ll see your assets grow by annual percentage yields (APYs) of up to 20% for ETH 2.0 Staking and 9% for BNB staking, among many other crypto yield rates that are way better than what they offer at the banks.
- Refine your trading strategies. As bear markets provide numerous low entry points to start your journey, it pays to use this period to refine your preferred trading strategy, whether you’re a hyper-focused intraday trader or just someone who positions investments every now and then. Come bull market time, you will be more prepared to make your moves with more confidence.
- Buy stablecoins. Let’s face it: most crypto traders still measure their crypto trading gains and losses through their worth in fiat, whether through the dollar or their local currencies. Hence, in a bear market, it can be prudent to consolidate some part of your crypto portfolio into stablecoins to exit from potential losses. Then, you can convert more of your fiat holdings into stablecoins to prepare for whenever the market enters recovery.
Leverage These Bear Market Tips By Depositing Fiat on Binance
Whether you approach this bear market by honing your trading skills, consolidating your assets into stablecoins, or shifting your focus to non-trading earning activities like staking, readying your funds for the next opportunity is important in a bear market. At Binance, we offer a safe, reliable, and fast platform for depositing your fiat currency into your Binance account. Doing this sooner rather than later gives you the following advantages:
- Proper positioning in the market. It’s better to have your fiat funds ready on your Binance account for the next great deal, rather than risk processing delays from your bank or card by waiting longer. While Binance itself features a quick settlement process for your fiat transactions, we can’t control what happens in your preferred bank.
- Proactive is better. In connection to the first point, handling your fiat deposits in advance gives you enough time to respond fast to the market, especially when it comes to detecting the first signs of recovery in the crypto market or participating in can’t-miss staking or crypto finance opportunities on Binance.
Apart from the prevailing market sentiment, whether in a bear market or a bullish one, many other factors can affect cryptocurrency prices. The cryptocurrency market has historically been highly volatile. Fund with just the amount of money that you can afford. Do your own research before making rash moves that might cost you money in the short and long run.
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