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May 23, 2022

Ember University: How to Navigate a Crypto Bear Market

It’s no secret that the cryptocurrency market has been bearish for some time now. Bitcoin and Ethereum, in particular, have seen their prices drop over 57% and 59% respectively since their all-time highs last year. So what does this mean for investors? In this blog post, we’ll discuss what a bear market is, why it happens, and how you can navigate the cryptocurrency market during these tough times.

It’s important to understand why bear markets happen. A bear market is a period of time during which prices in the stock market or other financial markets fall sharply. Generally speaking, bear markets are caused by a combination of factors that lead to investor pessimism and a loss of confidence in the market. 

This can happen for a variety of reasons; in this case record-high inflation, the war in Ukraine, and Covid-related supply chain disruptions. To add the cherry on top, we can’t forget about the Terra-Luna collapse. 

When investors lose confidence in the market, they tend to sell their assets, which drives prices down. Bear markets can last for months or even years, and during this time it can be difficult to make money from investing.

However, bear markets also present opportunities for savvy investors to buy assets at a discount. If you believe the market is due to recover over the long run, then bear markets can be a great time to invest. This can be a risky strategy, but if you believe in the long-term potential of the asset, it can pay off. 

Bear markets can be quite scary, but easily navigable if you have a strategy in place and understand the risks before investing. 

Alternatively, you can look into products that have been specifically designed to perform in bear markets, such as Ember Fund’s Bitcoin Defense portfolio.

The Bitcoin Defense algorithmically trades between Bitcoin and stablecoins by measuring long-term market trends. The portfolio is designed to protect investors from market bear cycles.

When the algorithm trades into USDC, the stablecoin will automatically be lent out on Compound to generate yield. This should be used as a complement to your overall bitcoin holdings.

Check out the Bitcoin Defense portfolio here

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