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Why should Investors continue SIPs in the Bear Market 2022?

6 Ways to Beat Inflation- Beginner's Guide

What is SIP? 

SIP or Systematic Investment Plan is an investment module that enables investors to invest a fixed sum regularly, to yield returns. The approach promotes discipline as the investment frequency ranges anywhere between daily, weekly, monthly or quarterly. SIPs are a smart way to make investments in different forms of funds, including crypto. It helps you in getting a grip on your monthly budget and effectively drives returns.  

Over the years, SIPs have become a common channel for novice and experienced investors alike. It does demand immense effort and the convenience it offers is noteworthy. So does it make sense to invest in SIP when the market is down? Read on to understand how to plan SIPs during bear market periods in India.   

About Bear Markets 

A ‘bear market’ is a condition during which the prices of securities decline by nearly over 20% from the latest highs. Investors are discouraged from economic prospects and the overall sentiment in the market is negative.   

During bear markets, there is a lack of demand for components that are high in supply. Consumers refrain from making major financial decisions and the cost of commodities continues to fall. Inexperienced investors may find the bear market extremely patchy with much difficulty to trade. However, there are some strategies that you can use to make the best of a bear market.

Additional Read: Top 6 Ways To Beat Inflation In India

5 Ways to Make the Most of a Bear Market  

The CoinDCX Crypto SIP feature lets you fairly sail through worrisome times by employing Rupee-cost averaging in crypto. For simpler calculation, we will only look at an investment in Bitcoin that began 5 years ago. Let’s say you have been investing a fixed amount of money at regular intervals without ever withdrawing – letting compounding work its magic. In our example, we will consider an investment of ₹1000 every month that has been made for the past 5 years. 5 years equates to 60 months, hence the total investment at the end of the period would be ₹60,000. Now take a look at the table below to show ROIs at the end of the term


Also, for simpler calculation purposes, we will round off the present value of Bitcoin in INR to about ₹18, 00,000. 

₹60,000  ~₹1,56,000  160% 
~₹18,00,000  0.08912  60 

And this is how the execution would look like as against the returns over time. The table and the graph below depict the investment and the returns on a 6-month period for the next 5 years. 

01/2018  6,000  10,765 
08/2018  12,000  12,000 
01/2019  18,000  10,990 
08/2019  24,000  38,488 
01/2020  30,000  42,858 
08/2020  36,000  53,337 
01/2021  42,000  2,17,489 
08/2021  48,000  2,00,041 
01/2022  54,000  2,71,635 
08/2022  60,000  1,47,492 

The chart in brief:  

If you began investing ₹1000 every month from the August of 2017 till now, even after the bear market with Bitcoin fallen over 70% from its all-time-highs, your total investment of ₹60,000 over the five years would still have been upwards of 160% at ₹1,56,514 as of today. Also, If you look closely at the graph attached above when Bitcoin touched its ATH, your ROIs would have been standing at an astounding 5.5x in the same timeframe.  

Additional Read: Diversify Your Crypto Portfolio

To Conclude

Bear markets most often make for a conducive environment to kick-start and maintain your crypto investments. Furthermore, crypto SIPs power you to go through the economic waves without majorly denting your potential returns.  

Build on your crypto SIP investment journey with CoinDCX, India’s simplest and safest crypto investment app.    


Should I continue my SIP in this bear market?  

One of the greatest advantages of investing through SIPs is the fact that it allows you to effectively sail through market fluctuations. Irrespective of how well or badly the market is performing, you must continue your SIPs. You do not have to time the highs and lows. The systematic investment plan helps you derive greater potential profits over time as economic growth improves. Withdrawing your SIP is a major mistake as you lose the possibility of returns when the market starts correcting.  

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