How the Bear Market Make People Rich in Crypto
How the Bear Market Make People Rich in Crypto
The current bull run lesson has proven a fact in cryptocurrency. It has proven that Bitcoin is resilient and it is inevitable.
It has also shown how resilient the digital asset has been despite several crackdown and negative events happening around bitcoin.
Two of the negative events that occurred recently were the China crypto crackdown and banning of exchanges and the Evergrande real estate crash.
These two events impacted the price of bitcoin causing it to crash to a level that looks as though it can never bounce back.
This has been the case with bitcoin. There are several crackdown and banning by different countries but the technology has proven that it is inevitable.
There is one special thing about bitcoin. It is a decentralized feature. This had made the technology to run itself without a corporation managing it.
But, the interest of this piece is to find an answer to this question. Between the bear market and the bull market, which makes people rich?
My answer is simple and straightforward, the bull market confirms the rich, it doesn’t make people rich. What makes people rich is the bear market.
I shall be explaining to you how that happens.
The Potential of the Bear Market
There are two factors that are very evident in the crypto bear market, especially with bitcoin. These are the factors that made people rich and will keep making people rich in this space.
Discounted Digital Asset Price:
In the bear market, the price of bitcoin and other crypto assets are highly discounted. Imagine during the China crackdown, Bitcoin crashed from $64k to $29k.
The crash in price was above 50% reduction from the all time high.
What this simply means to smart people is that the market price of bitcoin has been discounted. In plain terms, it means that you can now buy at $29K instead of the initial $64k.
It means the amount you would have used to buy 1BTC you can use the same amount to buy 2BTC and have savings from it.
When the market crashes, that is what it means to smart investors who understand that the crypto market is volatile. Crashing is like a gold mine to crypto smart investors.
However, it is only a few people that know.
The Historical Performance
The historical performance and trend of bitcoin has clearly shown that bitcoin price always bounces back whenever there is a huge crash. This was proven during the major crashes of bitcoin price this year.
The first was when China banned mining activities and operations from the country. The price of bitcoin crashed due to the fact that china has the highest number of bitcoin miners.
But, after some time, the price of bitcoin surged back.
The same happened during the evergrande real estate crash and the second china crack down on crypto operations and businesses in the country.
The price of the digital asset dipped but at the announcement of a great event, the price surged back and this time it was a new all time high.
Imagine you bought bitcoin when it crashed from $64 to $29K and held it until it pumped to $66K. You would probably be smiling for the rest of the year.
But here is the strategy that people that leverage crypto bear market use.
Buying The Dip And Selling The Top Strategy
According to Rothschid buy when the street is bloody even if it is your own blood. This means that leveraging the bear market is for the courageous.
It’s for the people that have understood the historical trend and performance of the market. Here is a breakdown of the strategy and how you can apply it.
Here is an article that explains Michael Saylor bitcoin investment strategy.
Buying the Dip Strategy
This is when an investor or a holder simply buys crypto assets when the market crashes. But to do this you need to be able to answer the question. How do I know the dip in the bear market?
There are two approaches to this; one, fundamental analysis approach. This talks about the negative news that occurs that could cause a market to crash.
For example the china crackdown on bitcoin mining. So, you have to be observing when such events occur.
Secondly, the use of technical analysis approaches. When the RSI is below 30, it shows that the market is in the bear zone. when you combine the two, you will know when it dip and what to do
Selling the Top Strategy
The second part of the strategy is selling your holding at the top. What I mean here is selling the crypto assets you bought during the dip when the price rises by a fantastic percentage.
But what are the signals to know the top of a crypto price. It is the same way I explained the bear market, but in this case it is the reverse.
When there is a major positive event happening in the industry like the Bitcoin future ETF approval, then that is a sign of a surge in price. Technically you can use the RSI to determine if the BTC market is in the bullrun. You know this when the RSI is above 70.
When you successfully combine these two indicators you will know where the market price is and what to do.
Conclusion
At the end of the day, holders and investor make more money than traders. This is because investors that buy the dip will wait patiently for the right time in the market to exit the investment.
This simple strategy can make you millions in crypto.
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