{"id":27002,"date":"2022-06-30T11:13:45","date_gmt":"2022-06-30T15:13:45","guid":{"rendered":"https:\/\/www.moneysense.ca\/?p=262372"},"modified":"2022-06-30T11:13:45","modified_gmt":"2022-06-30T15:13:45","slug":"how-to-trade-crypto-in-bull-and-bear-markets","status":"publish","type":"post","link":"https:\/\/www.moneysense.ca\/save\/investing\/crypto\/how-to-trade-crypto-in-bull-and-bear-markets\/","title":{"rendered":"How to trade crypto in bull and bear markets"},"content":{"rendered":"
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The severity and duration of price drops vary widely, which can be incredibly stressful for investors\u2014if they don\u2019t have a plan in place. As with bull and bear markets<\/a> in stock investing, it\u2019s essential to think about how you\u2019ll deal with the volatility of investing in crypto. Without a plan, it\u2019s easy to make hasty, emotionally driven decisions that could hurt your portfolio.<\/p>\n

What are bull and bear markets in crypto?<\/h2>\n

A bull market is a period in the crypto market when prices rise for an extended period. Crypto bull markets have typically lasted for a couple of years. Although these periods do see price drops, they\u2019re usually not as severe as a full-blown bear market, and many investors view them as good buying opportunities<\/a> for the long term.<\/p>\n

Bitcoin\u2014the oldest and largest cryptocurrency (by market capitalization)\u2014has had four bull markets since it broke USD$1 in 2011. In the latest of these, the coin rose over 1,100% from the lows of the COVID crash in early 2020 to its all-time high in late 2021.<\/p>\n

A bear market, on the other hand, is a period when crypto prices crash from all-time highs and continue to fall steadily. Unlike a minor \u201cdip,\u201d a bear market could see crypto prices fall 50% to 90% from their highs. In fact, bitcoin has fallen 50% or more<\/a> seven times since 2012, with the largest fall being about 87%. For added perspective, the average market-weighted drawdown, or decrease, in bitcoin\u2019s history is about 60%, and as of early June 2022, the coin is down well over 50% from its recent high of above USD$67,000.<\/p>\n

Because of their severity and the sense of doom they create in investors\u2019 minds, crypto bear markets are sometimes referred to as a \u201ccrypto winter.\u201d<\/p>\n

The psychology of crypto investing in bull and bear markets<\/h2>\n

Psychology can play a significant role in an investor\u2019s success. Each stage of the market cycle corresponds to a typical psychological state<\/a>, and knowing this can help you avoid making decisions based on emotions.<\/p>\n

For instance, when the market is at or close to all-time highs, euphoria prevails. Investors can fall into a false sense of complacency and end up making decisions they may regret (like buying more crypto at the peak of the market) or thinking a certain cryptocurrency will only keep going up. On the other hand, at the depths of a bear market, investors suffer from disbelief and agony, and they may feel as though the markets will never rise again.<\/p>\n

It\u2019s very difficult to make strategic investing or trading decisions when you\u2019re overcome with strong emotions, so consider having a plan in place for different market scenarios. Below are tips for both long-term investors and short-term traders on how to deal with bull and bear markets.<\/p>\n

Source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The severity and duration of price drops vary widely, which can be incredibly stressful for investors\u2014if they don\u2019t have a plan in place. As with bull and bear markets in stock investing, it\u2019s essential...<\/p>\n","protected":false},"author":1,"featured_media":27004,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[7,10],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts\/27002"}],"collection":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/comments?post=27002"}],"version-history":[{"count":0,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/posts\/27002\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/media?parent=27002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/categories?post=27002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.andrewwbradley.ca\/index.php\/wp-json\/wp\/v2\/tags?post=27002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}