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Navigating the Bear Market

31 August 2022

Navigating the Bear Market
Cyborg SwissBorg Investment Team

Cyborg

SwissBorg Investment Team

As anyone who considers themselves a crypto veteran knows, this space has survived more than a few cold winters with tough bears roaming red valleys, only to pull through to new green peaks with happy grazing bulls.

Even though this upward cycle has been the status quo, it is important to acknowledge the challenges the market now faces, particularly those of the macro storm we now find ourselves in with interest rates in the United States at highs not seen since the 90s in their attempt to curb inflation.

Bear markets traditionally hit the low and track sideways for a while before returning to an upward trajectory. During this drop and horizontal ranging, interest wanes as prices make slower, smaller moves with bounces appearing to be bottoms, trapping overly optimistic bulls when price then abruptly continues its descent.

Having and using a bear market strategy is crucial for long-term investors, who are required to hold back from the temptations of short-term moves where gains can be lost and instead ready themselves for the eventual reversal to the upside.

Looking back over the ups and downs of the crypto market, we find corrections of over 85%  in seemingly more stable times than those we face today. There is no reasonable argument against history repeating itself, with price dropping until the formation of the illusive bottom. Where finding a macro-bottom is an art unto itself, trend reversals generally show themselves with clear signs.

To observe how drastic these market resets can be, one need only look at the top 10 cryptocurrencies of successive market cycles. Only a small number of solid projects with courageous teams survive bear markets and go on to thrive. While this is the tough reality of evolution, ’every cloud has a silver lining’, and in every crisis lies opportunity. For investors able to keep their eyes on the long-term horizon, and manage risk appropriately while identifying and taking positions, this market cycle will be an exciting time with enormous opportunities for wealth creation.

In an effort to help the reader weather the storm, this report presents an understanding of high timeframe price movements, trends and correlations. That being said, this report is not financial advice and should not be treated as such.

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