A Bear Market Perspective: A Time For Accumulation Not Evaluation Of Success

Oct 25, 2023

Author: Irene H

In the world of cryptocurrency, market cycles are inevitable. We've all seen the thrilling highs of a bull market, where portfolios skyrocket, and it seems like every investment turns to gold. But what about those quieter times, the bear markets? It's easy to become disheartened when the red dominates your portfolio. However, a seasoned crypto investor understands that bear markets are not for evaluation of success but for accumulation. Let's explore why it's crucial to shift your perspective during these bearish periods.

The Bear Market Reality: Accumulation Zone

Bear markets can be challenging to navigate, especially if you're new to the crypto space. During these times, prices often dip, and portfolios shrink, leading many to evaluate their success based on portfolio value. But here's where the seasoned investors differ – they understand that bear markets are the perfect time for accumulation and it is not a time to look at the dollar value of your portfolio and make a determination of your success as a crypto investor.

Instead of fretting about declining values, consider them an opportunity to accumulate more of your favourite assets at lower prices. This is where the true crypto aficionados thrive. They see the bear market as a shopping spree, gathering coins and tokens they believe in for the long term. It's like a clearance sale for investors, and it's where the foundation for future success is laid.

The Fallacy of Portfolio Evaluation

Many investors make the mistake of evaluating their success based on their portfolio's current value during a bear market. It's a natural reaction to feel a sense of loss when you see your assets in the red. However, this approach is fundamentally flawed.

Crypto markets are incredibly volatile, and valuations can fluctuate dramatically from one day to the next. Measuring your success based on these daily or weekly evaluations is akin to trying to predict the weather by looking out the window for a few seconds. It's an exercise in futility and doesn't provide any meaningful insights.

Looking Forward to Bull Markets

Bear markets are a necessary part of the crypto journey. They provide the essential function of cleansing the market from excessive speculation and irrational exuberance. The savvy investor doesn't dwell on the temporary downturns but looks ahead to the future.

During bear markets, you should focus on the accumulation of assets that you believe in. Once the bear market transitions into a bull market – a period characterised by surging prices and hyper-positive sentiment– that's when your patience and accumulation strategy will pay off. In a bull market, crypto assets can multiply in value by factors ranging from some conservative figures of between 10x-30x... and all the way up to less conservative figures like 50x-100x. Your multiplier will of course depend on what assets you have accumulated as part of your portfolio. Some parts of your portfolio that are more speculative/high risk may even increase by 1000x.

Of course each bull market is different and nothing is ever guaranteed and this is why seasoned crypto investors will hold off on determining the success or failure of their investment decisions/actions until the space cycles back to a bull market and they get to the end of that bull market which usually presents itself as a rather large "bull run". It is then that they look at their portfolio and their profits and evaluate their success.

So perhaps when you look at your portfolio now instead of being disappointed at its current dollar value you can apply a multiplier to it and see what you'd be happy with - if that multiplier is between 10x and 30x then you are setting yourself up well for the next bull run. Remember that to realise that profit you must have an excellent sell strategy so you can grab that profit out during the bull market and get yourself cashed up and ready for the next bear market where the big discount sales will again begin - but that's a topic for another time!

Accumulation, Not Evaluation

When you find yourself in the midst of a bear market (and you will several times over!), remember that it's a time for accumulation, not evaluation.

Shift your perspective and view declining prices as an opportunity to acquire more assets at discounted prices. The true measure of success in the crypto world is not your portfolio value during a bear market but what you've accumulated for the next bull run. When that bull market arrives, you'll be grateful for the foresight and patience that drove your accumulation strategy. So, keep your eyes on the future, and embrace the bear market as your opportunity to build your crypto empire, one coin at a time.