Tips for surviving the crypto bear market

Bear markets are difficult as people watch their account balances diminish with the Bitcoin price dropping. There are many things you can do to ease the pain. This is an opinion editorial on Bitcoin Magazine by Boomer, a long-time and active member of the financial independence/retire early (FIRE) movement.

Deep down, we all knew this was going to happen. Bear markets suck, and they’re especially bad if it’s your first. Every bear market is different and there will always be people out there that will tell you that the sky is falling. Please don’t be one of those people. I know the price action has been a bit better in the past few weeks, but while we may not be in a (cough cough) recession (cough cough), things are still pretty dicey out there. Personally, I have no issue with seeing Bitcoin bouncing between $20,000 and $25,000 for a while longer, but I know how scary those big red candles can be if you haven’t experienced them before. If you bought your first few sats back in fall 2021 when things were looking like we were heading for $100,000, you’re probably feeling pretty defeated right now. I get it; it’s a terrible feeling. This might be my first Bitcoin bear market, but I was around for the stock market craziness from 2007-2009 — the last time that it felt like the world was ending — and it wasn’t any fun. There are a bunch of self-help articles out there that can guide 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.

Obviously, if the losses are really affecting you, please don’t be ashamed to reach out for real help. There are people out there who specialize in this. Remember that this is in no way financial advice.

Talk it out

The 2022 bear market isn’t taking any prisoners. Nobody seems to be safe from this one, and it isn’t just Bitcoin this time. Pretty much everybody is feeling the pain. Making matters worse, inflation is affecting us all. Reach out to a friend who’s interested in investing and try having a chat about it over a summery cocktail. Humans have a tough time realizing that they’re not the only ones going through hard times and too often we hide behind fake smiles when we’re going through them. Chances are your friend is feeling some of the same things you are, even if they’re not posting 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 that same pep talk to myself.

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

As a bit of a bonus, why not take the opportunity to try to orange-pill your friend? People realize that things are weird out there 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 a great time to get people on board.

Reevaluate your goals

Remember that risk tolerance is personal. Are you in Bitcoin for the long term? Lots of people say they are, but really just want quick gains. 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 having a tough time. Be honest with yourself and remember that there’s no shame in selling a bit of your assets if worrying about them is keeping you up at night. It’s better to take a loss now, learn from your mistakes, and move forward than to completely destroy your spirit. Reevaluate your priorities if you’ve lost more than you could afford to lose. If you have to sell at a loss, you should probably just 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 saw people give up on investing after the Global Financial Crisis because their goals and risk tolerance weren’t properly aligned. When they got steamrolled, they completely gave up. Don’t let that happen to you.

Bear markets do offer opportunities if you can handle it, but don’t be too hard on yourself if you can’t. I never thought I’d see Bitcoin under $20,000 again, so I get it if you’re feeling scared if you bought near the recent top. If you can stomach it, use the opportunity to pick up some sats on the cheap. Dollar-cost average if you can and use your position size to manage your risk. Reduce the sizes of your regular buys if the volatility is getting to you. I generally avoid rebalancing during bear markets, but if you have investments other than Bitcoin, it can be cleansing to sell some of your losers to buy something that’s even more battered so you can start fresh. Remember, though: I’m not giving financial advice.

Learn from the greats

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

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

“Price is what you pay. Value is what you get.” — Warren Buffett

Keep track of your mistakes

If you’re someone who dollar-cost averages, you can skip this one, but for those of you who like to try to pick bottoms or trade, this one’s for you.

I’ve kept a trading journal for the majority of my investing career and I always find it useful to go back and read. I like to keep track of a few things in my journal aside from price and quantity, like how I’m feeling. There aren’t any rules for 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 buys made sense at the time I made them. I’m primarily an index investor, but over the years I have jumped into a few tech stocks at the wrong time. The majority of my mistakes (aside from buying a few altcoins that shall remain nameless) were on the sell side: Most of my mistakes consisted of selling too early. Everyone thinks they’re a genius in a bull market and mistakes usually get brushed over with green paint. Bear markets are much less forgiving. It’s not enough to just keep a journal. Make sure to go back and read it once in a while. It’s surprising how often we repeat mistakes.

Build something … anything

I know it doesn’t feel like it, but a great opportunity is presented 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’re weathering this bear market and you’re going to be so much stronger once the storm passes. You’re focusing your energy and learning, but these are also the days that you should be taking chances by building something. Since there aren’t as many people grinding right now, the experts will notice the hustle. Don’t hesitate to reach out to these people for help. I’ve found the Bitcoin community to be amazingly open and helpful. Chances are the podcaster that you listen to every day will happily 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 about something in Bitcoin that interests you. Maybe it’s writing articles like this one about how you can help the Bitcoin community grow and prosper. It could be as simple as setting up a monthly Bitcoin meetup. We’re still early and these are the times to put in your proof of work. Be yourself and get out there; your voice matters. Get yourself ready for when the market turns because we all know that it will eventually. When it does, you might be one of the people that the new class of Bitcoiners are looking to for help.

BONUS: Get outside

It’s summer. Get outside and enjoy it. Turn off all your financial notifications on your phone. If you’re used to checking your trading account balance every day, why not cut back to twice a week? If you absolutely have to, designate a friend to text you if 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 that I have to repeat: If you’re really feeling down, don’t be ashamed to ask for help. There are resources out there.