Why is the Bearish Market a Good Opportunity for Crypto Investors?

This work has explained the reason why the bearish market is usually considered a good investment opportunity for crypto investors. Readers will find in this work the advantages and disadvantages of the bear season. We have further added the list of the best ten cryptocurrencies to trade during the bear season to assist the trader in making decisions.

Introduction

The idea of cryptocurrency investments has always been to buy when the prices are at the lowest levels and sell when the prices have attained a very high level in the future. Hence, spot traders consider the bearish market a good opportunity for long-term investments. Many investors tried to catch the bottom of every bearish market and utilize the opportunity to fill their bags with their favorite cryptocurrency when the price has been discounted. The assumption that the prices of all crypto assets often increased during the bullish season has made many investors eager to buy more crypto currency during the bear season. This work has therefore considered the major reasons why investors often viewed the bear season as the best time for long-term investment. We have further examined in this work, the top ten Cryptocurrencies that have performed so well during the previous bullish season and which are presently at their lowest prices, offering investors a new investment opportunity. While there is no guarantee that these coins will get to their previous all-time-high any time soon, our assessments are based on their past performance, which has become the yardstick for judging the future of a given cryptocurrency.

What is a bear market?

Source: zipmex.com

A bear market is a period when there is a large fall in the prices of all crypto assets. During this period, investors are known to refrain from buying more crypto currency and rather embark on selling off a huge chunk of all their crypto holdings; converting their values back to USDT or directly into an equivalent fiat currency. Often a bear season is usually referred to as the crypto winter season. This is because there is usually a dryness of interest in the purchase of cryptocurrency by investors just as we experience dryness during the winter season each year. The bear season is usually temporary but can last for two or three years before the market stabilizes again. Nevertheless, a bear season sets in whenever the price of Bitcoin halves by more than 50%.

Why is the bear market considered the best time for long-term cryptocurrency investments

Very often, the bear market has been described by experts as the best time for investing in Cryptocurrency. This is because the prices of all crypto assets are usually highly discounted during this period. Thus, at the apex of the bear season, the prices of most cryptocurrencies usually returned to dust. Here, crypto traders who considered cryptocurrency to be the future of currency across the globe, take great advantage of the low prices to buy cryptocurrency in the hope that the market prices will rise again.

Read more about how to buy cryptocurrency here.

Why do Crypto traders believe that the market will rise after each bear season?

There are several reasons why Cryptocurrency traders believe that the market will rise again after each bear market. This has been the driving force for investors who usually saw the bear market as an opportunity to refill their portfolios with their favorite Cryptocurrencies.  The reasons are seen below:

• Decentralization of Cryptocurrency: Cryptocurrency is a decentralized finance (defi) project. This means – it can hardly be controlled or regulated. Based on its decentralized nature, it has been difficult for governments and other regulatory bodies to stop cryptocurrency trading in their countries after making hostile laws against it. The decentralized nature of cryptocurrency has often increased investors’ confidence that their portfolios in cryptocurrencies can hardly be taken away from them. Hence, we always witnessed investors both old and new rushing to buy more cryptocurrency during each bear season.
• Historical records: Judging from the historical records, so many cryptocurrencies have shown strong resilience and we’re able to rise from their lowest points to new all-time highs after each bear season. An example is seen in the bear season of 2017 and 2018 when Bitcoin and other Cryptocurrencies fell to dust but later rose again to a new all-time high after the bear season. Given these records, analysts believe that the future is ever auspicious for Cryptocurrencies and that the prices will surely rise again after each fall.
• Future of Currency: There is a growing belief across the globe that cryptocurrency will rise to become the future of currency to be used for all payments. These crypto advocates predict that Bitcoin and altcoins will be worth very high in the future. Hence, they considered every dip in cryptocurrency as an opportunity for them to fill their bags with their favorite Cryptocurrencies to hold for the long term.
• The number of users: There is an increasing population of cryptocurrency users across the globe. According to the survey carried out by researchers, it was discovered that over 20% of all the citizens in each country are involved in cryptocurrency trading. The bear market therefore has been observed as offering new investors an opportunity to join the crypto community. Based on the large number of new traders coming into the market during each dip, analysts believed that the price of various Cryptocurrencies will likely return to a new all-time-high after each dip.
• Lucrative nature: Cryptocurrency trading has become a lucrative business for whales and hedge fund managers. The wealthy traders see  the bear market as an opportunity to increase their gains by buying more crypto Currencies and selling them when the prices are high. This set of traders always pushed for price recovery after each bear market by buying more crypto assets.
• Hedge against inflation: The fact that cryptocurrency is today used as a hedge against inflation has given many traders  the hope that the prices of Cryptocurrencies will always recover after each dip as long as inflation persists. The bear market witnessed in 2024 is widely believed to have been caused by the rising rate of inflation which has caused the Fed to hike the interest rates aggressively. Investors, therefore, suggest that the prices of all cryptocurrency will surely rise again once the inflation rate stabilizes or at least reduces.

Is the year 2024 a bear market?

Source: zipmex.com

The year 2024 has turned out to be a bearish crypto market. The series of interest rate hikes by the US Fed reserve and other countries too have pushed investors into a risk-off mode. The loss of appetite for risky assets, therefore, gave the bears total control of the crypto market this year. Experts predict that the bear market will likely continue till inflation subsides, causing the Fed to withdraw from hiking the interest rate.

What are the causes of a bear market?

By and large,  the major cause of the bear market has always been aggressive interest rate hikes by the US Fed Reserve. All cryptocurrencies existing today have been pegged to the US dollar. Hence, an increasing dollar strength caused by aggressive interest rate hikes always discounts the crypto market. Other causes of a bear market are discussed below:

• Ban on Crypto mining: Most crypto projects known today have been built by mining. Hence any ban on mining activities for cryptocurrency within a country with a large number of crypto traders could change the market direction into a bear season over a long period. A clear example could be seen in the ban placed by the Chinese government on crypto mining in July and August 2024 which resulted in a short bear season for cryptocurrency during the past year.
• Government interference: Very often government actions geared toward cryptocurrency regulations could lead to a massive loss of appetite for buying cryptocurrency. Also, some government fiscal policies such as high taxation for capital gains made from crypto trading, could easily cause investors to withdraw their assets thereby throwing the market into a bear season.
• Wars and Pandemic: An outbreak of war between major Bitcoin mining countries could throw the crypto market into a bear season. This is because: the restrictions coming due to wars often impacted on the crypto mining rate.  Equally, an economic slowdown arising from a pandemic could result in a bear market for crypto as traders return to economic activities after a long period of inactivity.

How long does the bear market last?

The duration of a bear market often depends on the initial cause of the bearish trend and how long it takes for it to be overcome. A bear season for instance caused by an aggressive interest rate hike will continue MoM until the aggressive interest rate hike is fully eliminated. Also prices are expected to remain stable all through the next quarter. While a bear season could last for one to two years and above, the minimum duration of a bear season is a quarter of the year.

What are the advantages of the bear market?

• Offers opportunity for long-term investments: The prices of all crypto assets are largely discounted during the bear season – offering investors a fresh opportunity for long-term investment.
• Serves as a litmus test for knowing strong crypto projects: The bear market often provided a good opportunity for testing various crypto projects; to know which ones have been built on a strong network to withstand high market volatility. Coins that maintain stability and always bounce back after each fall during the bear season are considered good crypto projects for long term investments.

What are the disadvantages of a bear market?

Source: fool.com

• No guarantee that all the coins will rise again: There is usually no guarantee that all the coins that witnessed severe price crashes during the bear season will rise again during the bullish season. Often investors might lose appetite for a particular coin after the bear season is over, leading to price stagnation.
• Decrease in liquidity: The loss of appetite for buying Cryptocurrencies during the bear season often led to a reduction in the market liquidity. Market liquidity is dependent on the number of buyers and sellers coming into the market. When the number of sellers outweighs the buyers, then the market liquidity is affected too.
• High Cases of Rug Pulling: There is usually a high increase in the number of failed crypto projects during the bear season. Some developers tend to remove the liquidity for their coins at the apex of the bear season when the number of sellers outweighs the buyers.
• Regular cases of Liquidations: Many traders who fail to make correct predictions during the bear season usually get liquidated. According to existing records, it was discovered that more traders got liquidated during the bear season than any other season.
• Crashing of weak crypto projects: Some crypto projects with poor hash rates tend to crash during the bear season. A good number of weak crypto projects were seen crashing in 2024 due to high market volatility.

Factors to consider while choosing a coin to trade during the bear season

To make trading easy for beginners during the bear season, we have further elaborated on the major factors to consider while choosing a coin to trade during the bear season. They are discussed below:

• Market Capitalization: Market capitalization is seen as the total amount committed into a given crypto project. While coins with a low market capitalization could offer quick profits opportunity within a short time, yet they are not recommended for traders during the bear season. Coins with very low market capitalization are more prone to rug pulling during the bear season than any other coin. There is often a higher tendency for major investors to withdraw their investments from such projects. Often some developers remove liquidity from their coin when they fear a massive selloff.
• Trading Volume: The trading volume of a particular cryptocurrency is an important factor to be considered while choosing a coin to trade during the bear season. Often, the trading volume helps to determine the number of transactions carried out on the network successfully. Coins with high daily trading volumes are usually the best coins to trade during the bear season.
• Volatility: The volatility of a coin is usually dependent on the number of buyers and sellers trading the coin at the exchange. Coins with high volatility are generally found to be resilient in recovering during the bear season.
• Past Performance from its launch: Coins that has consistently performed well from their launch till the present moment are usually the first choice for trading during the bear season.
• The number of exchanges Listed: Listing a coin in multiple exchanges helps to increase both the liquidity and volume. This helps to sustain the coin during the bear season. Coins that have been listed on multiple exchanges are usually the best coin to trade during the bear season.
• Developers: The team of developers behind a particular crypto project is a very important factor to consider while choosing a coin to trade during the bear season. Often, coins with committed developers survived more during the bear season than any other coins. Also, the strength of the developers is usually weighed through their records.
• Use Case: The use case of a  particular crypto project creates demand for it and determines whether it will survive during the bear season. Coins with multiple use cases survived more during the bear season.
• Total supply: Coins with very high total supply above 100 million often faced the greatest challenge during the bear season. While choosing a coin to trade during the bear season, it is important to choose only from the list of those coins that has an equal number as its maximum and circulating supply.

Best ten coins to trade during the bear season

In light of the above factors above, we have further provided the list of the best ten coins to trade during the bear season. They include:

• Bitcoin
• Ethereum
• Binance Coin
• Cardano
• Polkadot
• Litecoin
• Solana
• Bitcoin Cash
• Stellar
• Dogecoin