Tips for Surviving the Bitcoin Bear Market – Bitcoin Magazine

This is an opinion piece by Boomer, a long-time active member of the Financial Independence/Early Retirement (FIRE) movement.

Deep down we all knew this was coming. Bear markets suck, and they’re especially bad if it’s your first. Every bear market is different and there will always be people who tell you the sky is falling. Please don’t be one of those people. I know the price action has been a bit better over the past few weeks, but while we may not be in a recession (cough cough) (cough cough), things are still quite dicey. Personally, I have no problem seeing bitcoin bouncing between $20,000 and $25,000 for a while, but I know how scary those big red candles can be if you’ve never experienced them before. If you bought your first sats in the fall of 2021 when things seemed to be heading towards $100,000, you’re probably feeling pretty defeated right now. I understand; it’s a terrible feeling. This may be my first bitcoin bear market, but I was there for the stock market craze from 2007 to 2009 – the last time I felt like the world was ending – and it wasn’t fun. There are a bunch of self-help articles out there that can guide you through the turbulence of stock market downturns, and I’ve found that most of the advice translates well to bitcoin. Here are a handful of tips that have helped me in the past.

Of course, if the losses are really affecting you, please don’t be ashamed to ask for real help. There are people who specialize in this area. Please remember that this is not financial advice.

Talk it over

The 2022 bear market takes no prisoners. No one seems to be immune to this one, and it’s not just bitcoin this time around. Almost everyone feels pain. Worse still, inflation affects us all. Contact a friend who wants to invest and try to discuss it over a summer cocktail. Humans find it hard to realize that they aren’t the only ones going through tough times and too often we hide behind fake smiles when we go through them. Chances are your friend feels some of the same things you do, even if they don’t talk about it on social media. I’ve noticed that when I give someone a pep talk, it resonates with me more than when I give the same pep talk to myself.

“If you want to go fast, go alone, but if you want to go far, go together.”

As a bonus, why not take the opportunity to try to make your friend swallow the pill? People are realizing things are weird and they’re looking for new options, so they might be more receptive to the pitch than they would have been a few months ago. It really is the perfect time to get people on board.

Reevaluate your goals

Remember that risk tolerance is personal. Are you in bitcoin long term? Many people say they are, but really want quick wins. Have your goals changed? If your long-term thesis is still intact, you should be able to ride out this volatility, but adjust your expectations if you’re going through a tough time. Be honest with yourself and remember that there’s no shame in selling some of your assets if worrying about it keeps you up at night. It’s better to take a loss now, learn from your mistakes, and move on than to completely destroy your spirit. Reevaluate your priorities if you have lost more than you could afford to lose. If you have to sell at a loss, you should probably do it and move on. But don’t give up! Reducing your exposure by decreasing your stack size might not be a bad idea. I’ve seen people give up investing after the global financial crisis because their goals and risk tolerance weren’t properly aligned. When they were crushed, they completely gave up. Don’t let this happen to you.

Bear markets offer opportunities if you can handle them, but don’t be too hard on yourself if you can’t. I never thought I’d see bitcoin again below $20,000, so I understand if you’re scared if you’ve been buying near the recent high. If you can bear it, take the opportunity to buy cheap sats. Average dollar cost if you can and use your position size to manage your risk. Reduce the size of your regular purchases if volatility gets to you. I generally avoid rebalancing during bear markets, but if you have investments other than bitcoin, it can be purifying to sell some of your losers to buy something that’s even more battered so you can start fresh. Remember, though: I don’t give financial advice.

Learn from the greats

Seek wisdom from investment legends. While I don’t necessarily agree with their investing strategies for 2022, guys like Charlie Munger and Warren Buffett have been through decades of market cycles and there’s a lot of value in channeling their experience. These dinosaurs have seen many bear markets in their time and have a lot to say about them. Try searching for “bear market quotes” from these guys. There are many important lessons to learn when markets fall and most of them cannot be learned from a textbook.

This is one of my favorite quotes to get me out of a bear market:

“The price is what you pay. Value is what you get. —Warren Buffett

Keep track of your mistakes

If you’re someone with an average dollar cost, you can skip this one, but for those of you who like to try picking funds or trading, this one’s for you.

I have kept a trading journal for most of my investing career and always find it useful to go back and read it. I like to keep track of certain things in my diary besides price and quantity, like how I feel. There are no rules on what you should put in your own journal, just be consistent. Over the past few weeks, I’ve been going through my journal to see what I was thinking when I made certain decisions. There were a few mistakes, but most of my purchases made sense at the time I made them. I’m primarily an index investor, but over the years I’ve jumped on a few tech stocks at the wrong time. The majority of my mistakes (apart from buying a few altcoins that will remain unnamed) were on the sell side: most of my mistakes were selling too soon. Everyone thinks he’s a genius in a bull market and mistakes are usually covered in green paint. Bear markets are much less forgiving. It is not enough to keep a diary. Be sure to go back and read it from time to time. It’s amazing how often we repeat our mistakes.

Build Something…Anything

I know it doesn’t feel like it, but a great opportunity is available to us right now. Bear markets have a way of separating signal from noise, so if you’re still reading Bitcoin articles, listening to podcasts, stacking sats, and building a Bitcoin community network, you’re most likely “a real one.” You are resisting this bear market and you will be so much stronger once the storm passes. You focus your energy and your learning, but these are also the days when you should be taking risks by building something. Since there are not so many people at the moment, experts will notice the bustle. Do not hesitate to contact these people for assistance. I found the Bitcoin community incredibly open and helpful. Chances are the podcaster you listen to every day will be happy to give you some advice. Maybe it’s as simple as buying a used S9 ASIC miner and learning how bitcoin mining works, or maybe you can start your own podcast or Tik Tok channel on something in Bitcoin that interests you. Maybe it’s about writing articles like this about how you can help the Bitcoin community grow and thrive. It could be as simple as setting up a monthly Bitcoin meet. We’re still early and it’s time to put your proof of work. Be yourself and get out there; your voice matters. Prepare for when the market turns, because we all know it will eventually happen. When this is the case, you may be one of the people the new class of Bitcoiners turn to for help.

Bonus: get out

It’s summer. Go out and enjoy. Turn off all your financial notifications on your phone. If you are used to checking your trading account balance every day, why not reduce it to twice a week? If you absolutely must, nominate a friend to text you if it’s shit really hits the fan. Hint: it probably won’t…and even if it did, what would you actually do about it?

One last thing I have to repeat: if you’re feeling really down, don’t be ashamed to ask for help. There are resources. I am by no means a mental health professional, but if you ever need a simple message of encouragement, my DMs on Twitter are open. WGMI.

This is a guest post by Boomer. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.