Since the start of 2022, ‘volatile market’ and ‘crypto bear market’ have been the most commonly used terms in the crypto space. But what does it really mean for you? Let’s look at the current market scenario and what to expect in the coming days.
When a market sees continuous price declines, it enters a bear market cycle. But when prices are rising and it reaches all time highs, it enters a bull market cycle. So when you look at investing in general, the crypto market is not really different from other traditional assets.
The chart given below represents ‘Previous Bear Market Cycles of Bitcoin’. It can be seen that over every market cycle, i.e., in the years 2012, 2014, 2018 & 2021, there has been a diminishing return over time.
Additional Read: Millennials prefer Investing in Crypto over Traditional Investing
Here are a few strategies that will not only help you survive the bear market but also benefit from the same.
WAYS TO SURVIVE CRYPTO BEAR MARKET
1. ADOPT A LONG-TERM INVESTMENT STRATEGY: HODL
One of the golden rules of investing is to always separate your emotions when making investment decisions. One should never become fearful or anxious about bear markets. Instead, do a fundamental research on cryptos you wish to invest in. If you believe in their long-term growth, only then invest in them. This belief will help you in HODLing your assets even during bear markets.
2. EARN SECURED PASSIVE RETURNS ON YOUR CRYPTO
While you HODL your crypto, you can make use of the ‘Earn’ feature introduced by CoinDCX, to earn secured earnings on them at an established rate of return. There are no additional charges or lock-in period. You can also withdraw your funds anytime without worrying about any cancellation fees.
3. PORTFOLIO DIVERSIFICATION
As the saying goes, “Don’t put all your eggs in one basket”. A wise investor must spread their portfolio among various crypto assets. The process of diversifying the portfolio among various crypto assets depends solely on the risk appetite of the investor. Although diversification does not always protect you from losses, it creates an invisible barrier to protect your investments against volatility and minimizes risk. For more info on how to diversify your crypto portfolio, click here.
4. START A CRYPTO SIP AND BENEFIT FROM RUPEE-COST AVERAGING
Crypto SIP is an investment strategy where small amounts are systematically invested in a crypto asset at regular intervals of time, over a long period. Ultimately, this helps investors in achieving rupee-cost averaging as the overall buying price of the crypto asset is averaged out, which also reduces the impact of market volatility. It also eliminates the investors’ necessity to make the most difficult investment decision, i.e choosing the right time and the right price to invest in a crypto asset. Click here to learn more about Crypto SIP.
Also, visit CoinDCX App to discover more.
CRYPTO BEAR MARKET: THE INDIAN SCENARIO
The Indian experience of the crypto bear market is slightly different from the rest of the world.
Why so? On one hand, the Indian Government is regulating cryptos by recognizing them as Virtual Digital Assets (VDA). On the contrary, they have also imposed a high tax rate on crypto gains and TDS on every crypto sale transaction, slowing the adoption of cryptos.
Some of the key highlights on regulations are:
- Income tax of 30% on profits from VDA
- An additional TDS of 1% on sale of the same.
- No deductions except on the cost of acquisition
- No set off of any loss allowed while computing such income, also no carry forward of losses to subsequent years. Gift taxes if any will be the liability of the recipient.
All this combined with the overall financial market’s bearish sentiment has caused a lot of FUD among crypto investors in India.
SUMMING IT UP!
Investors should always be aware of their risk-appetite and only invest how much they can afford to lose. Market cycles are natural to every asset class so don’t be disappointed by it, instead think of them as opportunities. The key is to focus on building long-term wealth using the above mentioned strategies. That being said, always do your own research before investing in any crypto asset.
Also, visit CoinDCX App to discover more interesting crypto content and start investing in your favourite crypto coins with confidence.