Talking about investment in these tough market times might scare you but we want to remind you, that what feels like the end of the world is actually not. During bull cycles, investors are generally sure of making gains whereas in bear markets, an unimaginable amount of pessimism sets in.
What if we say like salsa dip, tandoori dip, mayo dip, market dip could be spicy too at times! Humor apart, as there is a bear behind every bull, there is also a bull behind every bear. Here are some tips that would help you stay safe during times of high volatility.
1. Don't over-invest, but invest with conviction, check for strong fundamentals in whatever you invest. Bear markets are where the magic happens, and more millionaires are created in history during bear markets. For example - Image buying ether at 90$ in December 2019. It touched $4800+ during its peak in Nov 2021, now trading at close to $1100.
2. Don't fall into FOMO or Fear of missing out. There could be a dip behind a dip. There is an old saying on Wall Street: "The Dow climbs a wall of worry." In other words, over time the Dow has continued to rise despite economic woes, terrorism, and countless other calamities. Investors should try to always separate their emotions from the investment decision-making process.
3. Diversify your crypto portfolio. Instead of going for just coins, look for a diversified group/basket of coins that could help you reduce the volatility. How you slice up your portfolio depends on your risk tolerance, time horizon, goals, etc.
4. Invest consistently. The dollar (Rupee) cost average is considered to be a safe method to invest. By investing a fixed amount of money at regular intervals regardless of market conditions, you’re more likely to be able to purchase your favorite crypto basket or coin at more affordable prices, and potentially see the coins rise in value once the market rebounds.
5. Work on the fundamental analysis of crypto. Fundamental analysis of crypto coins becomes very important now - project value prop, team size , etc. If the project is just riding the crypto wave without value then it's given that the coin would have dipped more than most other coins.
It's quite natural to grow uneasy with these market conditions but avoid knee-jerk reactions as there have been more than 14 bear markets since 1926 and they’ve tended to last an average of less than one year, compared with the multi-year span of a typical bull market.