The $ 290 billion market cap spilled into a widespread cryptocurrency sell-off last week. According to Fundstrat, these 3 investment strategies will help your portfolio during the cryptocurrency bear market.
How did the bear market start?
cryptocurrency.comAs you’ve seen, with the bear market raging, investors are in a panic when they sell their cryptocurrency holdings. According to CoinMarketCap, the global cryptocurrency market capitalization worth around $ 290 billion has evaporated in the last week alone. Also, on Monday, the same figure hit an 18-month low of just under $ 1 trillion.
It is impossible to know exactly what is the root cause of the recent bearish trend. Inflationary pressures stemming from the Federal Reserve’s hawkish monetary policies can be called. Investors may be wary of more speculative assets. It is possible that all of this causes tokens to be traded alongside risky tech stocks.
“Lehman moment” and cryptographic bloodbath
Elsewhere, the biggest names in decentralized finance are sinking into the mud. Cryptocurrency lending and lending platform Celsius has promised high returns. He then blocked withdrawals from the user account in the face of potential liquidity problems.
Allegedly, cryptocurrency hedge fund Three Arrows Capital is expected to face financial headwinds after liquidating $ 400 million. And finally, let’s not forget the “Lehman moment” of nascent crypto, some say. Namely, the May crash of the UST algorithmic stablecoin.
However, Fundstrat Global’s Sean Farrell makes a different point. Farrell wrote that both the Celsius and UST debacles are the “long-term builder” for cryptocurrencies. Farrell describes the current state of the industry as a “bloodbath”. He then he says:
Public demonstrations of such uninformed destruction of capital are often overlooked in the traditional financial industry. Fortunately, we have the advantage of iterating and developing faster.
3 ways to change your investment strategies when there is a bear market
Volatility is nothing new for cryptocurrencies. And there are ways to survive the bear market, according to the Fundstrat executive. For this, they can modify their investment strategy in different ways.
First, it is possible for investors to reduce the altcoins in their portfolios. Farrell recommends short-term coverage, especially long-term coverage, such as around a month. Altcoins have taken some of the biggest hits of the recent shock. After experiencing various network outages, Solana was down 88.6% from its ATH and 24.5% last week. “However, we are still constructive on 2H cryptocurrency prices,” Farrell wrote.
Second, it is possible for medium- and long-term investors to “more aggressively” allocate to Bitcoin. This is partly due to the company’s belief that the market is approaching the “bottom” area for Bitcoin. This means that there is a buying opportunity to take advantage of an affordable price for the token.
Over the past few months, the leading cryptocurrency has experienced a severe downward trend in its value. As of Thursday, it was trading around 69% above ATH. But its price handles the storm better than most. Over the past three months, Solana and Ethereum have lost 67.55% and 62.13% respectively. However, Bitcoin fell by around 49.64% over the same time frame.
Greg King, founder and CEO of Osprey Funds, a $ 130 million cryptocurrency manager, recently shared his views. King said Bitcoin will withstand even better current market conditions. He also mentioned:
People are also wondering what can I do to cover inflation? What can I do to purchase assets that perform well in this type of environment? And if Bitcoin is digital gold, it suddenly becomes one of the best contenders out there.
Finally, investors should be cautious no matter what when investing in the current bear market conditions. “In the short term, we think it’s wise to stay cautious and protect your downsides,” says Farrell.
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