We’re currently entering the 14th month of a cryptocurrency bear market.
Bear markets are actually my favourite time, in any market.
One, because hype is almost non-existent. Anything that rises to the top during a bear market is almost always based on merit. Hype costs money, and nobody spends money on anything unessential during deep bear markets.
The second reason is because prices are at their lowest. Think about what happens when your favourite store has a big sale. Do you avoid the store and wait until they raise their prices again? Or do you go and buy as much as you can to take advantage of the big discounts?
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Currently, we’re seeing Bitcoin stabilise within the $3,300 to $3,800 range. As you know, this is a still a huge increase on the previous high of $1,151 in 2013 (around a 200% increase).
What this tells us is we still have a long way to fall before breaking any alarming level of support, and that over the long term, Bitcoin is most certainly still trending up. If $3,200 is the new bottom, that’s a very high bottom. I am suspecting it will fall below that.
However, as a long term investor these details are less important. What we know is that cryptocurrency prices are cheap, and many projects are starting to emerge as strong contenders for the next bull run.
All five of those I think are strong contenders to return high multiples when the bull market returns.
Bitcoin, of course, is still the cornerstone of any portfolio and I continue to consider that the best investment in cryptocurrency right now. Of course, there is a possibility Bitcoin falls off the face of the earth tomorrow. However, in my opinion there is a much bigger possibility that 2019 is the last time you will ever see Bitcoin at a price this low.
Universal investment principles apply to this market just like any other market. Bear markets are the best time to accumulate, bull markets are the best time to take profits.
Because most people are irrational, and because irrational investors often are driven by emotion rather than logic, most people generally do the opposite. They buy heavily during bull markets, and sell in panic during the bear.
Of course, this is good news for you and I. It means we can take advantage of those sellers, and buy valuable assets are much lower prices than their real value.
This is what is happening right now. The bear market is deep, and many people are starting to get impatient and sell assets at low prices. As a long term investor, your goal should be to invest at low prices, making now an ideal time to accumulate any assets you believe to be of value. When/if the bull market returns, the prices you see today will be inconceivable.
However, investing during a time like this requires both confidence and patience.
Confidence that you have done your research and understand why this asset is valuable.
Patience for a bull market to return so you can see the market value of your assets rise.
Neither are particularly difficult, at least not intellectually. You don’t need to be intelligent to make money in a market. But you do require discipline.
Do you have what it takes to be a bear market investor?
I am not a financial advisor. The information in this piece is my opinion only. Consult your own professionals for financial advice.