Bear market returns overnight, take 6 strategies to deal with losses

The original text is from Duo Nine

Compilation | Odaily Star Daily Golem (@web3_golem)

Today, the encrypted market has experienced a sharp decline again. BTC briefly fell below $54,000, and ETH briefly fell below $2,900. In the past 24 hours, the long positions across the network have been liquidated for nearly $590 million.

The future market trend is difficult to predict, but we always have to learn how to face losses. Whether we can navigate through the loss period correctly will determine whether we can ultimately become winners in the market. Duo Nine, an encryption educator and technical analyst, shares 6 strategies to deal with losses for readers to refer to.

Lock in profits in a timely manner

Short-term profits or unrealized gains are not enough, profits must be locked in. Without a clear strategy, the cryptocurrency casino is likely to take them away immediately.

The user in the figure below lost 400,000 US dollars in a single transaction. He made a profit from 500 US dollars to 400,000 US dollars little by little. But he lost all the profits in this transaction.

In addition to the market FOMO factor, every lucky person will eventually lose luck. You can win the market a hundred times, but the market only needs to win you once.

To avoid this situation, if you are lucky enough to turn $500 into $400,000, the first task should be to lock in some profits and keep them in cash. You can then continue to trade with a little more money than the principal, so even if the subsequent market performance is poor and the principal is lost, there is still nearly $400,000 in profits. Over time, this will make you a better trader/investor and help you adjust your mindset faster and refocus after losses. Only when the strategy produces good long-term results should you increase the principal, trading account, or investment portfolio.

Stay put and look for the best buying opportunity

The bear market is the best layout opportunity, usually when people say bitcoin is dead on social media, that is the best time to buy and take risks. Strive to maximize the risk/return ratio, that is, find high-odds bets.

In the example above, in the current market conditions where BTC is weak, I will convert the 400,000 profits into USDC and participate in staking to enjoy passive income.

If calculated at the previous guidelines with an annual return of 29%, $400,000 per month can bring in about $10,000. Of course, you can also choose a more conservative stake income, and in any case, the income will still be positive as the market continues to decline.

It is not recommended to buy Bitcoin or any tokens now. If the market continues to fall, consider catching the bottom at the right time. Remember, not buying will not incur any loss, and still maintain a profit of 400,000.

Once there are signs of a bottom in the market, you can buy Bitcoin in batches as you would in a bear market. This way, even if BTC continues to fall or trade sideways, the risk will be reduced to some extent, and there will be a chance for Bitcoin’s price to recover and reach new highs. With patience, a good entry point can easily double that $400,000.

Take a look at the current cycle, if you bought Bitcoin at a price below 20,000 during the previous bear market, then you have already outperformed the market. However, the more diverse the investment portfolio, the more BTC should be held.

Do not trust AltCoins

AltCoin is not a reliable currency, and its value storage is very poor in the long run. Most chains and applications do not need tokens. At best, they are a good technology.

A common way to lose money in cryptocurrencies is to buy the latest issued altcoins and hold them for the long term, just like buying tulips back in the day and hoping to get rich from them, which doesn’t work.

Altcoins are suitable for short to medium-term speculation, that’s it. Any investment in altcoins for more than a year may lead to losses. Although there are some exceptions, generally speaking, altcoins are not a ticket to long-term success.

They may make people rich overnight, but if you don’t follow the first point of this article, you will also go to zero immediately. Most altcoins can plummet 90% to 99% in a bear market due to lack of liquidity. This also means that insiders can easily pump them up, and once they profit, no one can stop the price from crashing. As the most liquid cryptocurrency, Bitcoin doesn’t have this problem.

Fundamentally, only Bitcoin, also known as ‘digital gold’, is a reliable currency. Ethereum, on the other hand, is more like oil. Its price fluctuates with changes in network usage.

Don’t bet too much on alts, even though it may bring 10 to 100 times return. As you grow older and accumulate wealth, reduce exposure to alts, focus on Bitcoin for inner peace, it’s worth it.

Do not quit your job and engage in full-time cryptocurrency speculation

95% of traders are losing money, only 5% are winners. Trading cryptocurrencies is harder than working because it’s 7*24 H all the time. Full-time cryptocurrency trading may be a bad decision. Instead, keeping your job or finding a job you love and investing in cryptocurrencies (mainly referring to Bitcoin) is more appropriate.

One good way to avoid losses in cryptocurrency is to avoid frequent trading. Instead, we can invest in this emerging industry, treating investment like buying into a casino and trading like playing its games. This means we can invest in the infrastructure of the crypto industry from a long-term perspective.

In this sense, Ethereum and its DeFi derivatives are a good example. While it is difficult to predict, DeFi has contributed to today’s Ethereum, while Bitcoin remains and will continue to be the most reliable currency.

If you want to protect your wealth, buying Bitcoin on the dips will never be a bad choice. Buying Bitcoin is not to sell it for tomorrow, but to hold it for the long term and retire.

Reject Greed and Get Rich Slowly

Quickly making 10 times profit on Meme will give you pleasure and allow greed to take over, which is likely to lead to bad trades in the near future. Never go all in on a single altcoin. You can speculate freely, but always keep a smaller position.

Making a year’s salary in one trade can change your life, but losing everything in one trade is also possible. The appeal of Meme coins is that you can get rich overnight (or become poor again). They are high risk and only worth it when the capital you invest is relatively small.

In this case, taking on greater risk makes sense. If you already have a considerable amount of crypto assets (probably mainly BTC), it’s enough to speculate on meme coins or similar high-risk coins with just a few percentage points of your total assets.

If you make a big profit on Meme, sell it and never look back, and follow the first point of this article. Never sell Bitcoin to buy alts. If you find yourself doing this, there is only one reason: greed.

Accept losses, manage risks

Failures and losses are unavoidable in this field, but we can mitigate their impact and reduce losses. The market does what the market does, and our role is that of risk managers.

Making money shouldn’t be our ultimate goal, instead, we should strive to maximize our time and freedom. Bitcoin is the answer, and most people only realize this after losing a significant amount of money by playing altcoins.

By accepting losses, we can focus more quickly on important things and improve our risk management ability. The reason why those who rank in the top 5% of traders in this game can win is that they manage risks properly. They may also often lose, but the scale is small, and they can make big profits several times a year.

Losses are common, but they need to be small enough so that they don’t throw you off balance.

Be patient with yourself and find your own rhythm, which can be applied not only in the field of cryptocurrency.