It is said that every bear market is a time for reflection, learning and building. So we follow this line of thought and reflect on what lessons we have learned in this cryptocurrency bear market and how to better survive this bear market. (Recap:Overcome the bulls and bears!Senior traders disclose 9 investment rules: don’t blindly follow Twitter, delete ups and downs, HODL, and never liquidate your positions) (event background:BitMEX founder’s point of view: The bear market will last for 6-12 months, how should we buy the bottom?)
By now, no one should doubt that we are in a bear market, and not the beginning of a bear market. As for whether it is in the middle or the end, it is a matter of opinion, and each has its own reasons and arguments, so in the end, we have to rely on time to give us the answer.
It is said that every bear market is a time for reflection, learning and building. So we follow this line of thinking and reflect on what lessons we have learned in this bear market and how to better survive this bear market.
What lessons have been learned
1. The arm can’t twist the thigh
Whether it is an institution or many old leeks with certain financial knowledge, they are not ignorant of the changes in the macro environment. They know that raising interest rates means that the valuation of risk assets will decline, and shrinking the balance sheet means that the liquidity of the US dollar will tighten. Reduced funds in…
However, many people still did not run, or at least left a lot of positions in the circle, because they have “belief” and think this time will be different.
These beliefs are certainly not aimless or fanatical. Compared with everyone in the bear market of 2018, everyone felt confused and wondered what the BTC blockchain could be used for. Now we have Defi, NFT, and Web3. The multi-chain universe has basically taken shape, and the expansion of ETH and the advancement of Layer 2 In the second half of the year, the ETH 2.0 Merge is a certainty. More importantly, practitioners in the circle are no longer confused. We have already figured out the general direction of progress, and the rest is just Build, Build, Build…
In addition, we have more and more institutions entering the market, and more and more countries recognize Bitcoin, and even use it as fiat currency!
Everything looks so beautiful~
However, the various so-called “goods” and fundamentals in the circle are still no match for the changes in the macro environment outside the circle, and the arms cannot twist the thighs.
After all, this is still a world dominated by Web2 and Cefi, not Web3 and Defi.
2. Rules are meant to be broken
The lows of each bear market are never lower than the highs of the previous bull market. This is a law that almost everyone knows.
This is also one of the reasons why BTC is around 20,000 for a lot of the world. This is the consensus of many, many people, and it can even be said that their last psychological line of defense.
But it’s still broken 😱
Once again, the law that has been correct several times in the past is not necessarily correct this time.
In other words, when a rule is known by more and more people, and even a consensus is formed, then the day when it is broken will be closer.
Just as whenever market sentiments form a consensus, be it panic or greed, the market tends to turn around and go in the opposite direction forever.
This makes me think, will the bull market theory of the next Bitcoin halving still work? Or at least, will the time between the arrival of the bull market and the ATH of the currency price still follow the previous laws? After all, this theory, both inside and outside the circle, is basically unknown to everyone.
3. Plan for the worst early
When the capital market is bad, it is worse than imagined, and it is much worse.
We thought that Terra and UST had a market value of tens of billions, and they were almost too big to fail. Too big to Fail!
We thought that top institutions like Celieus and 3 Arrows had so many technical experts, financial experts, and huge wealth. How could they be bankrupt and liquidated and insolvent?
However, it turns out that no matter how big a project is, it can still collapse, no matter how big the market value is, it can still be wiped out in just a few days, and no matter how strong the leader and team are, they may still lose everything by accident. .
After all, in terms of market capitalization, Fannie Mae and Freddie Mac are bigger, and in terms of team, Lehman and Long Term Capital have more geniuses.
However, you can still “die for you” 🤭
There is no such thing as “too big to fail” or “too strong to fail” in financial markets.
how to prepare
I believe that you should have seen a lot of “Bear Market Survival Guide” recently, even including “How to spend 5 yuan a day” “Bridge hole selection skills” and other funny title pictures
Bear market survival guide, to put it bluntly, nothing more than three things!
1. to survive
According to the previous bull and bear laws, the duration of the bear market should be 1-2 years, so you should at least cash out the funds to protect your living for 2 years in the bull market last year. In other words, to have a stable cash flow income, whether it is a job or a business, in short, the first thing you need to ensure is survival.
Of course, considering that this is the first time the crypto world has experienced interest rate hikes, shrinking balance sheets, and a possible economic recession, there is a certain probability that this bear market will be longer than before. It doesn’t have to happen, but you should at least be prepared physically and mentally.
2. Fixed investment or Degen
In addition to survival, if there is additional funds or surplus, then the current BTC and ETH prices, whether they are bottom or not, have at least entered a fairly good fixed investment range. From now on, if you invest in BTC+ETH every week or every month, buy a small price, buy a big one, and get to the next bull market, how can you get several times the return.
To be a little more radical, you can choose Degen (Degen is an abbreviation for degenerate (degenerate), which means DeFi gambler, veteran). Although the hundreds of thousands of APY mining pools on Defi have basically become bubbles and go with the wind, such as Uni V3 can still be played. For example, the current price of ETH is 1,000 US dollars, and your bottom line is 500. You are optimistic about a rebound to 1,500 in the short and medium term. Then you can go to Uniswap V3 to take the ETH and USDC in your hand and make an LP in the range of 500-1500. Usually, when the market volatility is not large The handling fee also has an annualized rate of 10-20%. For example, the market has been fluctuating rapidly recently, and the annualized handling fee can even reach several hundred in the short term. It is still one of the pretty good “cash flow” options.
Or, more advanced players can still maintain a certain degree of profit in a bear market or avoid larger losses through protective put options and covered call options.
3. Continuous learning
You must know that most of the good projects that broke out in the bull market were born in the last bear market. For example, Uniswap, AXS, Solana, which have been brilliant in this cycle… ETH in the previous cycle, IOTA, etc. From this point of view, the bear market is a good time to brew a real “big opportunity”.
This requires you to continue to learn, keep up with the technological development and hot trends of the industry, and then judge the possible track for the next bull market outbreak and ambush in advance in the bear market.
Take a few recent examples:
Do you know the main projects of ETH Layer2, their technical characteristics and project progress?
Do you know what several representative projects of NFT Defiization are, and what are their advantages and disadvantages?
Do you know what the recently emerging modular public chain representative project is, and what unique technology and narrative does it have?
Do you know which new players have joined the cross-chain track. Will the full-chain Dex be a powerful tool to solve the liquidity fragmentation?
These are some of the technical trends in the currency circle that are taking place. Only by understanding these can you be prepared for the “big opportunity” in the next 1-2 years. It is even said that the next round of bull market may have nothing to do with the above technical trends. The outbreak track is a corner that has not been seen by most people today, which has high requirements for investors’ vision and even luck.
However, if you don’t study, no matter how good your vision and how lucky you are, you won’t see anything. As the saying goes, opportunities are always reserved for those who are prepared.
So bear market, keep learning, be prepared, and welcome the next round of bull market.
Bankless: 8 projects we are optimistic about in a bear market
Buterin’s point of view: the future is “multi-chain” rather than “cross-chain”!Cross-chain bridges have basic security restrictions, and they will suffer at the same time if they are attacked.
Analysis | Layer 2, cross-chain and public chain are three pillars, who will realize the ideal of “scalability” of blockchain?
Something big happened to Solana!The cross-chain bridge Wormhole was hacked with 320 million magnesium WETH, and the official provided the hacker “10 million magnesium bonus” to call for its return
👇Get first-hand blockchain and cryptocurrency news for the first time👇