How to recognize a bear market and survive in crypto: from theory to practice

Every cryptocurrency investor sooner or later faces the question: how to distinguish market phases and adapt to changes in a timely manner? A bear market is one of the most frightening scenarios for beginners, but experienced traders know how to profit from it. Let’s understand what is really happening in the market during downturns and how to position yourself correctly.

When talking about a “bull market” — what is meant?

A period of sustained price growth in crypto is called a bull market. It’s not just a few days of upward rally, but a long-term trend where asset values increase by at least 20%, often much more.

During such times:

• Investors actively buy, convinced that prices will go even higher
• Cryptocurrency popularity increases — they are discussed in news, forums, social media
• Liquidity on exchanges is boiling — trading volumes reach record levels
• Positive news lifts market sentiment — this can include updates of major projects, crypto regulation acceptance, expansion of institutional investments

A vivid example: during 2020–2021, Bitcoin soared from $10 000 to the $69 000 mark. It was one of the most powerful bull markets in digital asset history, where even casual passersby talked about crypto.

Bear market — and it’s not just a small dip

A bear market is not an instant panic, but a prolonged period when prices consistently fall, and the crowd is pessimistic. Investors massively sell assets, fearing further losses. The market atmosphere is filled with uncertainty and fear.

Typical signs of a bear market:

• Assets lose 20% or more from their peak values
• Trading volumes decline — the market becomes “dry,” liquidity decreases
• Investors panic and sell — the faster, the better, regardless of actual value
• Negative news background — crypto bans in countries, increased regulation, economic crises

A classic example: 2018. Bitcoin fell from $20 000 to $3 000 — this was a true bear market that left many beginners without capital, who didn’t know how to behave.

What distinguishes these two market states?

How to recognize that a bear market has started — or is ending?

The exact date of a market reversal is a guessing game, but there are signs that observant traders notice.

When does a bear market usually begin:

• After a prolonged bull period, the price cannot go higher than previous highs
• Trading volumes decline, people start selling more actively
• Media are filled with negative headlines about crypto
• Regulatory environment tightens or new restrictions appear

Signs that a bear market is ending:

• Price stops falling to new lows
• Trading volumes interestingly increase from lower levels
• Positive news begins to replace negative headlines
• Technical indicators show a potential reversal (this requires analysis, not just wishes)

How to profit when a bear market dictates the conditions?

Many beginners believe that profits can only be made when prices rise. That’s a mistake. Skilled traders earn in both periods.

In a bull market, the strategy is simple:

1. Buy and hold — purchase assets and wait for their price to increase
2. HODL strategy — psychologically hard to hold during fluctuations, but long-term investors do exactly that
3. Trend trading — buy on small pullbacks, sell at local peaks

In a bear market, flexibility is needed:

1. Short selling (short selling) — sell an asset you don’t own, expecting to buy it back cheaper. Works if you correctly guess the decline direction.
2. Capital protection via stablecoins — transfer funds into USDT or USDC to preserve purchasing power until the market recovers
3. Diversification — distribute funds among several assets so as not to keep everything in one coin that fell 80%
4. Gradual investing — if you believe in long-term potential, you can buy assets at the bottom of the bear market in installments

How long does this last? When to expect a reversal?

History shows:

• Bull markets usually last 1–3 years, but can be shorter
• Bear markets can last from several months up to 1.5–2 years

Exact timing is impossible to predict, but you can prepare by studying historical cycles and technical analysis.

Most common questions about bear and bull markets

Can you make money during a bear market?
Absolutely. Short selling, diversification, moving funds into stablecoins — all this allows not only to preserve capital but also to profit.

How to understand that the market is changing?
Pay attention to three things: 1) technical analysis of charts (price not reaching new lows), 2) trading volumes (start increasing from low levels), 3) news background (positive news replacing negative).

Is it worth buying in a bear market?
If you are a long-term investor and confident in the project, yes. The bottom of a bear market is often the best time to enter. But do it gradually, not all at once.

How to protect your funds during a decline?
Transfer to stablecoins, diversify your portfolio among several assets, set stop-loss orders for positions you do not plan to hold long-term.

Conclusion: a bear market is not the end, but an opportunity

Understanding how a bear market works separates successful investors from those who panic at the first dip. Every cycle is an opportunity to review your strategy, learn something new, and strengthen your position in the market.

Remember: bull markets bring profits easily, while bear markets teach caution and analysis. Use both phases to accumulate knowledge and capital.