How to trade in a bear market

How should one trade in a bear market, when everyone seems to be a genius during a bull market?

The current market situation is indeed scary, but that doesn't mean investors should just sit and watch from the sidelines. In fact, history has proven that one of the best times to buy Bitcoin is when no one is talking about Bitcoin. So even though things might seem bad right now, there could still be opportunities for those who are willing to take a risk.

I remember the 2018-2020 crypto winter well. At that time, hardly anyone was talking about crypto in a positive or negative way. It was during this time of prolonged downtrend and lengthy sideways chop that smart investors were accumulating in preparation for the next bull trend. I believe that the next bull trend will be even more exciting than the last one, and I am looking forward to seeing what the future of crypto holds.

There are still great strategies for investing in Bitcoin, even though crypto might be in a crab market. Of course, nobody knows exactly when the market will turn around, but that doesn't mean that investors should give up hope. There are still plenty of opportunities to make money in the cryptocurrency market, so those who are willing to take a risk may be rewarded handsomely.

As we take a look at three different elements, it's important to remember that our perspective matters. What we see and how we see it will always play a role in how we

Dollar-cost averaging can help you accumulate wealth over time.

As an investor, it's important to be price agnostic when making decisions about where to invest your money. This means that you shouldn't let short-term fluctuations in asset prices influence your investment decisions. Instead, you should focus on identify a few assets that you believe in and investing in them for the long term. If a project has strong fundamentals and a healthy network, it makes more sense to dollar-cost average into a position rather than trying to time the market.

This chart from DCA.BTC shows that the cryptocurrency has been on a steady upward trend over the past year. This is good news for investors in the digital currency, as it indicates that the value of

Results of weekly dollar cost averaging into Bitcoin. Source: DCA.BTC
I believe that dollar cost averaging into Bitcoin is a smart way to build up a position in the digital currency over time. By buying a small amount of Bitcoin each week, you can avoid the volatility of the market and slowly but surely accumulate a larger position

It's no secret that cryptocurrency investing can be a volatile and stressful endeavor. But for those who are willing to commit to a regular auto-purchase plan, the rewards can be significant. Investors who auto-purchased $50 in BTC weekly over a two-year span are still in profit today, thanks to the power of dollar-cost averaging (DCA). By buying into a position gradually, DCA investors mitigate their risk and can avoid the emotional rollercoaster that comes with making

Go long on extreme lows to trade the trend.

Investors should be prepared for generational buying opportunities by building a war chest of dry powder and sitting on their hands. Entering the market when it is deeply oversold and all metrics are in extreme is typically a good place to open spot longs, but with less than 20% of one's dry powder.

When assets and price indicators are two or more standard deviations away from the norm, it's time to start looking around. Some traders zoom out to a three-day or weekly time frame to see when assets correct to higher time frame support levels or previous all-time highs as a sign to invest. Looking at the big picture can be a helpful way to gauge when to enter the market. By paying attention to key support and resistance levels, traders can get a better idea of when an asset is due for a correction. This can help them time their investments and maximize their profits.

200-week moving average heatmap for Bitcoin. Source: LookIntoBitcoin
Looking at the 200-week moving average heatmap for Bitcoin, it is clear that the cryptocurrency is in a long-term uptrend. This is good news for investors, as it indicates that the market is bullish on Bitcoin.

I believe that people should be looking for key indicators like moving averages and support levels when deciding when to buy Bitcoin. On-chain metrics like the Puell Multiple and MVRV Score can also be helpful in determining whether or not extreme lows have been hit, indicating that it may be a good time to buy.

For traders looking to take advantage of market volatility, opening a long position during an extreme sell-off can be a great opportunity. Whether it's a swing trade or a longer-term investment, getting in while prices are low can lead to big profits down the road.

Do nothing until the trend changes

There is no doubt that trading during a bear market is tough. For many investors, the priority is preserving capital and protecting their portfolio. In these circumstances, it may be best to wait for confirmation of a trend change before taking any action. As the old saying goes, "the trend is your friend." Everyone seems to be a genius trader during a bull market, so if that's you, then wait for the next one to come along and enjoy your success.

It's unwise to trade against the trend unless you have a positive method for doing so during downtrends and bear markets. This is because these market conditions are notorious for chopping up traders and reducing the size of their portfolios. If you want to succeed in trading during these conditions, you need to have some skill in shorting. Otherwise, you're likely to end up losing money.

Traders should keep an eye on both the crypto and equities markets to get a complete picture of the market. Both have shown a strong correlation in the past two years, so it is important to monitor both. This will help traders make more informed decisions about their trades.

Bitcoin correlation to equities markets. Source: TheBlock
It's no secret that Bitcoin and the stock market have had a volatile relationship over the years. But according to a new report from The Block, there may be more of a correlation between the two than previously thought. The

It is easy to be misled by the minuscule moves that occur in Bitcoin's four-hour and daily price charts. One could easily be lured into some hefty positions based on the belief that BTC is on the verge of a reversal. However, the most recent trend reversal suggests that BTC's price action may be the canary in the coal mine, chirping louder and louder as the United States Federal Reserve amplifies its intent to raise interest rates.

A close eye on the market structure and price action of the major equity indexes is essential to understanding the strength and duration of any bullish or bearish trend that Bitcoin might show. By tracking these indicators, investors can get a better sense of when to buy or sell Bitcoin, and how to position their portfolios to maximize profits.

Big Smokey is one of the most respected voices in the cryptocurrency industry, and his weekly newsletter is required reading for anyone looking to stay up-to-date on the latest trends. In each issue, Big Smokey provides insightful market analysis, trending how-tos, and early-bird research on potential emerging trends. Whether you're a seasoned crypto veteran or just getting started, you won't want to miss out on Big Smokey's newsletter.