The cryptocurrency bear market is here! Three Things Every Investor Should Do

The bear market has here, and we are beginning to feel the effects... Malaysians are feeling the repercussions on a daily basis, as the Ringgit falls and the inflation rate rises. In mid-May, Bank Negara Malaysia (BNM) announced an increase in the overnight policy rate (OPR) to 2% in order to better control inflation and reduce Malaysians' burden.

How can we, as crypto investors, reduce our risk exposure, especially given that digital assets are significantly more volatile and prone to dramatic price swings than conventional asset classes？ As cryptocurrencies gain mainstream and institutional attention, they appear to be more closely linked to traditional markets, with issues such as inflation and geopolitical crises affecting the crypto market as well. However, it is vital to note that cryptocurrencies and the underlying blockchain technology are not hype machines or get-rich-quick schemes, as real-world use of this growing technology by various governments, organizations, and corporations is increasing year after year.

Here are some pointers to help us all keep sane during a bear market:

• Do your own research (DYOR) and do not FOMO to buy the ‘dip’.



Mike Novogratz, CEO of digital asset manager Galaxy Digital, cautioned against attempting to forecast the latest crypto crash's bottom. In response to the recent market crisis, Novogratz stated that attempting to pick a bottom is an exceedingly high risk, and that the market might crash even further:

Alts are down more than 80% from their highs. In 2018, it was more than 95%. That is another 70% decrease. My point is that picking bottoms is risky, and if you do, scale in gradually.

Sources from: https://twitter.com/novogratz/status/1527614092156051458

Remember that we can never time the markets or predict the true 'drop,' and we may wind up making a disastrous trade if we do not undertake both fundamental and technical analysis before making a transaction. Because the bitcoin field is replete with conjecture, it is critical not to blindly adopt outside opinion without first fact-checking it. To reduce your exposure during these volatile market conditions, try using the dollar cost average (DCA) approach to distribute risk and lower your possible loss during investment. 'Do not put all your eggs in one basket!' is typical trading advise from professionals, and for good reason.

2. Stay focused on the long term.



Remember that markets move in cycles, and good macro developments may be able to enhance market circumstances in the future. It is critical to understand that certain elements influencing present market circumstances may not have a long-term impact when the next bull market occurs. The question is, can you get to the finish by saving and investing for the long term over years？ Governments and institutions are seen to adopt cryptocurrencies, such as in the United Kingdom and the United States, where national policies and legislation outlining crypto-safe adoption are in place. All of this strengthens the case for the long-term development of this sector, though it will take time and substantial pricing has yet to be seen in the present price trend.

3. Review your risk tolerance and do your investment planning.



These unsettled times are ideal for reviewing your risk profile and re-evaluating your portfolio. Revise your present investing strategy and revisit it on a regular basis to see if it is still effective and relevant in different market situations. Instead of holding a lost position, you might channel and reallocate your cash to another investing opportunity. You should also keep an eye out for other cryptocurrencies with solid fundamentals for diversification opportunities. By reviewing your crypto portfolio and the larger market, you can find and seek to correct errors in your portfolio. Some critical issues to consider include: Are you overly reliant on and invested in a particular blockchain ecosystem？ What industries are you overlooking？ Make a note of any holes in your portfolio. All of these provide you a comprehensive picture of how much risk you should take.

Conclusion

When investing in various asset classes, each investor has their own investment strategy and risk appetite. While recent market events have impacted many and resulted in losses, you may limit your exposure by examining your risk management methods to ensure you are on the correct road. A risk management approach is essential because it decreases the likelihood of you engaging in emotional trading, which frequently results in losses. It may also be a good idea to take a break from the markets if you find yourself becoming overly anxious, as you can always re-enter the markets whenever you are emotionally and physically ready. Maintain a long-term perspective, and you will be a tougher and smarter investor to get through a bad market.

Disclaimer: WikiBIT publishes various content as general information only, without taking into account the circumstances, needs or objectives of any of its clients. This is not investment advice. Please conduct your own research when investing in any project.