5 tips how to get through the bear market

Author Daphne Rose Kingma once philosophized: “Holding on is believing that there is only one past; Letting go is knowing there is a future.”

If you apply this analogy to the crypto space, you can sometimes be labeled as a so-called paper hand. Anyone who, contrary to this, would not part with their assets under any circumstances is considered a diamond hand. It is therefore important for such long-term holders in particular – especially in times of a difficult market situation, as is currently the case due to the FTX bankruptcy – to know how to properly hold their cryptocurrencies together. Five important tips for hodlers.

Tip 1: Do your own research (DYOR)

In principle, every investment should be secured by prior research. The targeted filtering of information provides certainty as to whether investing in a specific asset makes sense or not. In addition, you can convince yourself of the background of the respective project.

It is important to remember to use a mix of different sources. It is therefore important to check all interesting data. The white paper, YouTube videos, market data, blockchain explorer, social media community and many more. If you know what you are getting yourself into, you can sit back and hodle in difficult times.

Tip 2: Being able to refute FUD reports

At the same time, the correct distinction between FUD messages and constructive criticism runs. The better you have informed yourself in advance, the easier it is to tell them apart. It quickly becomes apparent whether a message is relevant for the future of the project or not. It is always important to deal with the complaints. In order to hodle in a relaxed manner, you should also know the answer to common FUD phrases.

Tip 3: Savings plan Hodln

Once on the way to the rabbit hole, one thing is particularly difficult: saying “no”. Investing becomes a real addiction. Anyone who has started accumulating cryptocurrencies needs more and more of them. Even professional traders get carried away by the fear of missing out and give in to the urgency of building positions as quickly as possible. In short: Fear of Missing Out (FOMO).

A savings plan helps to remain a relaxed hodler. The “Cost Average” strategy consists of making recurring investment decisions within a certain period of time. Completely independent of the market situation. The advantage of this approach is that the risk of impulse buying is minimized while rational decisions are in the foreground. At the same time, the investments are distributed in such a way that an average price per unit invested is calculated.

In this hypothetical example, the investor used a cost-average approach and made regular investments of $100 per month. When stock prices were higher, he bought fewer shares; when they were lower, he bought more.

If the investor had put the $1,200 in a lump sum investment, the average cost per share would be $25. With the savings plan strategy, he was able to reduce costs.

Tip 4: Just Hodln

In a nutshell: provide factual information, discredit misinformation and then invest properly. Incidentally, the term Hodl came about in a post by the user “GameKyyubi”. On December 18, 2013, he wrote an entry in the BitcoinTalk.org forum with the caption “I AM HODLING”. There he described that his girlfriend was in a bar and the Bitcoin price had collapsed. Despite all the advice to sell, he decided to do the opposite and stuck with the coins. He justified this by saying that he was just a bad trader. He excused the spelling mistake by saying he was drunk. Now there is one more thing to do: Hodln.

Tip 5: Exit strategy

Bridges collapse, kingdoms fall, lovesickness heals, and Ethereum is now using Proof of Stake (PoS). Daphne Kingma’s quote can also be reasonably applied to the crypto sector. Sometimes letting go is the better option. Also as a hodler.

Especially when a project changes fundamentally, the investment strategy has to be reconsidered. This was the case, for example, with the recently successful Ethereum merger. The consensus mechanism has been changed: the crypto project now runs on a POS basis. Persistent ETH miners resisted and performed a hard fork.

You should therefore think about an exit strategy in advance. Even if nothing changes to the basic structure of the project, it is important to have a contingency plan. As is well known, it is better to be safe than sorry. Also when hodling.

Disclaimer

This article was published in October of this year. Before re-publishing, it was reviewed and adjusted accordingly.