The bear market, an opportunity to rethink your portfolio
As you’re making your best bid for McDonald’s, pause for a few minutes to better understand your mistakes, but also your positions.
It is essential to understand what went wrong for you in order to improve further. It should be noted in general that bitcoin (BTC) and ether (ETH) resist a fall better than other cryptocurrencies.
In effect, some cryptocurrencies will disappear, others with strong fundamentals will also fall drastically. So, take all the altcoins that make up your portfolio and take stock of each one.
For instance, it is better to cut some positions with low capitalization and refocus these on the largest capitalisations. This avoids a bigger loss, and avoids a potential abandonment of the project and therefore of your tokens. Even if it can sometimes seem difficult and constraining, it is better cut one position and raise on another than to brawl over it.
Review your investment strategy
Did you take the time to celebrate your best investments during the bull run? So take the time this time to review your strategy. Ask yourself key questions: Why didn’t it work? Did I really achieve my goals? Have I been subject to someone’s influence on my strategy? Do I have a real strategy?
If these questions speak to you, analyze what worked in your method, but also what caused the problem. Thereafter, make a plan for 1, 2, 3 or even 5 years, but be clear about your objectives. Do not hesitate to write these elements in a notebook, as they will help you remember them better.
Implement a recurring purchase strategy as the Dollar Cost Averaging (DCA) can already help you. Define an amount, an investment day, a frequency and a cryptocurrency and set that up. Remember that the fundamentals have not changed and that your goal should be to aim for the long term.
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Your cryptocurrency wallet
Rethinking your portfolio is one of the key steps in this bear markt. Depending on your budget allocated to your investment in cryptocurrencies, do not have 100 positions. It would be better 3 to 4 strong positions than 50 weak positions.
By being aware of the different market cycles, it is better to have in your possession assets with large capitalizations and projects you prefer, than small, low-cap cryptocurrencies. You can’t imagine the number of people with a budget of 10,000 euros owning dozens of cryptocurrencies and suffering a drastic drop in their portfolio in this period.
Right now you can apply the 0 technique. Depending on your budget and the number of 0s in it, this will define your number of positions (for example, for a budget of 10,000 euros, this makes 4 positions). Of course, this rule is absolutely not obligatory and you are free of your investments.
Many people invest in cryptocurrencies without especially having stablecoins or euros in reserve. Indeed, this can make the difference during a period of decline, in particular to quickly redeem a low point, or even to not have full exposure with volatile crypto-assets.
Have between 10 and 15% stablecoins or fiat currencies must now be essential for your wallet. Don’t forget that your stablecoins can be used for staking or lending in order to increase this percentage and have a better field of action.
The importance of the psychological aspect
If you are reading these lines, it is because you want to change something and learn. We can only encourage you on this path.. But the problem for many people remains the psychology with the management of their emotion.
There are many cognitive biases that can cause us to make mistakes. It is time to know them in order to work on them later and don’t make the same mistakes again.
The anchoring bias
We talk about it first, because it is the present. This bias comes down to being anchored in your position and wait for an event like the price of bitcoin at $20,000 or say to yourself that it is impossible for it not to return to around $60,000.
This bias directly influences your strategy and prevents you from making pragmatic choices. To fight it, you will have to find a solution on your own, but rest assured, we have a few things to think about.
Indeed, each time this feeling comes to your mind, you can write it down in a notebook or other. Some people sometimes find a beneficial effect of noting one’s emotions in order to better understand and apprehend them.
The confirmation bias
It is one of the factors that reassures you, but also puts you in denial. Who has never been more reassured by people who are going in the same direction? It is because of this that you can no longer reflect on your position.
To do so, try always confront two points of view and seek to take a critical look at your position. As soon as you hear something that makes you think or that you don’t like, start weighing the pros and cons and dig in that direction. This can be distorted and cause you to waste time, but it will at least have had the merit of looking for yourself and asking yourself the right questions.
The sunk cost bias
Who has never heard: At the price it is now I can only keep it “. As soon as you have this in mind, try to reflect on your position. Imagine that you do not cut your position, but that the descent continues or at best its price goes up during the next bull run without ever reaching your entry point, then you will surely be remorseful for not selling it.
In investment and particularly that of cryptocurrencies, it’s hard to win every time. So you have to know how to lose a battle in order to win a war.
Here, it is a question of cutting its position and admitting its defeat than to see the latter descend into hell. Thanks to the sale of this one, you will have (perhaps) the opportunity to redo yourself and in particular on larger positions such as BTC or ETH which remain less volatile than the others on the downside, but evolve correctly on the upside over the long term.
The bias of authority
Who hasn’t been swayed in the cryptocurrency market? Nobody can say no by the simple fact that marketing is one of the most important things in this industry. From now on, it’s time to let yourself be influenced, but intelligently.
A project may catch your eye, but never fall into the direct purchase. During a bear market, you have time to learn about a project, understand it and analyze it.
We can only advise you as soon as you read a tweet, an article or a Medium post from do your own research especially on the project, but also on the people behind the various publications. An influencer will not have the same speech whether or not we accept that he is an “early adopter” of a project. Influence is paid for, so don’t fall for it and ask yourself the essential questions for your strategy.
The key points to remember in the bear market
As you have understood, we give you food for thought here during this publication. Whether it is for building your strategy than the work needed to be done on yourself. Even after a few years on the market, errors are still present and there is no escaping them. But you can understand them and remedy them, or even better anticipate them.
Training, whether on project analysis, graphic analysis or a critical look at your strategy is necessary. However, don’t be hard on yourself, but learn to become pragmatic and stick to your strategy. Remember that the fundamentals remain and that every sector experiences periods of lows which will only be vast memories during the next periods of euphoria.
If we had one last piece of advice for you, it’s to hang in there.. Indeed, the more you move away from the market, the more you lose interest in it and you make mistakes and do not anticipate the next rises. Do not forget that it is by forging that one becomes a blacksmith and that Rome was not built in a day.
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