A bear market is what every trader needs to know.

Bear Market is a prolonged period of uncertainty

When asset prices consistently move downward for months or years, crypto traders refer to this as a Bear Market. Unlike short-term declines, such periods reflect deeper issues in the economy – recessions, unemployment, declining corporate profits. This is a normal part of market cycles, although it is challenging for newcomers.

Bitcoin has been in a macro uptrend throughout its existence, but it has experienced several brutal downturns. Some of these resulted in BTC dropping by more than 80%, while altcoins fell by 90% or more.

Why is the decline happening so quickly?

Traders have a saying: “up the stairs – down the elevator.” The upward movement is usually slow and gradual, while the decline can often be sharp and extreme.

When prices start to fall dynamically, three things happen simultaneously:

1. Mass panic and uncertainty – when traders observe a sell-off, they frantically exit their positions.
2. Domino Effect – each wave of sales pushes new participants to exit the market.
3. Using Leverage – margin traders are being liquidated, which intensifies the decline to capitulation.

What Provokes a Bear Market?

There are several typical triggers:

Economic factors – recession, slowing GDP growth, decreasing company profits force investors to sell stocks and crypto en masse.

Geopolitical uncertainty – wars, trade conflicts, sanctions force the movement of capital into safe assets (cash, bonds).

Bubble Burst – when inflated prices become unviable ( like the dot-com bubble of 2000 ).

Monetary policy – the rise in interest rates, as in 2022, makes borrowing more expensive and puts pressure on market sentiment.

Sudden shocks – pandemics, technological disasters that cause panic.

Often these factors act simultaneously, as was the case during the financial crisis of 2008.

Practical Strategies for Bear Markets

Risk Minimization

The simplest approach is to reduce position sizes by converting part of your assets into cash or stablecoins. If watching the price drop is uncomfortable, it is a signal that you have taken on too large a position.

HODL – wait and believe

Historical data shows that even the largest markets (S&P 500, Bitcoin) have recovered after every downturn. If you are investing for years or decades, a Bear Market is not necessarily a cause for panic.

Dollar Cost Averaging (DCA)

This method involves regularly investing a fixed amount regardless of market prices. When prices are low, you buy more of the asset, reducing the average cost. For example, if you bought 1 BTC for $100K and the price fell to $80K, purchasing another BTC lowers your average cost to $90K.

Short positions and hedging

Experienced traders profit from declines by opening short positions. Hedging is a private case of shorting, where you hold the asset in spot but simultaneously open a short position for the same amount to offset potential losses.

Trading Bounces Against the Trend

This is a high-risk strategy where traders look for short-term rallies (dead cat bounces) during a bear market. They open long positions during the bounces but must exit before the downtrend resumes. Without confirmation of the end of the decline, this approach is dangerous.

Historical examples of Bitcoin declines

2018–2019: After peaking at around $20K in December 2017, the market fell by 84% during 2018–2019.

2020: Bitcoin fell by more than 70%, with the decline in the first quarter caused by the COVID-19 pandemic. This was the last time BTC dipped below $5K.

2022: After rising from $4K to an all-time high of about $69K in 2021, the price fell by 77% to $15.6K in November 2022.

Current Situation: As of February 2025, Bitcoin is trading at $88.60K with an annual decline of 9.40%. Although the market is not in a classic Bear Market, historical volatility serves as a reminder of potential corrections.

Bear Market is not a sentence, but an opportunity

The terms “bear” and “bull” markets come from animal imagery: the bear strikes down with its paw (decline), the bull lifts its horns up (rise). These terms have been used since at least the 19th century, when the word “bear” was associated with the resale of bear skins for hunting – a prototype of modern shorts.

Bear Market is a natural part of cycles. The fact is that every decline eventually comes to an end. Traders who apply a disciplined approach – whether HODL, DCA, hedging, or active short trading – have the opportunity to protect themselves and even make a profit.

The main thing is to clearly understand your risk profile, have an entry and exit plan, and not let fear dictate your decisions.