Bitcoin Investment Strategies to Use In 2023 When the Market Shifts from Bear to Bull

Bear and bull markets can last from a few months to a couple of years (and can vary in many ways). A bear market occurs when the trends are downward, and Bitcoin values are declining, while a bull market occurs when the trends are upwards, and Bitcoin grows in value. If you’re interested in cryptocurrency, bear markets can be a fantastic time to buy Bitcoin with bank transfer, as the price is lower. When the bullish markets emerge, you can make a solid profit. To figure out if the market is bull or bear, it’s necessary to consider its immediate reaction to particular conditions and how it performs in broader contexts. Small movements might represent a market correction – i.e., a short-lived trend lasting less than a few months.

A bull market is coming eventually, so you might want to prepare before the prices surge. Diminishing supply and increasing demand influenced by the next Bitcoin halving, not to mention tremendous increase in usage, could spark the next bull run. This guide explains in greater detail the strategies to use to prevent losing precious unrealized gains.

Take Profits Systematically with Sell Limit Orders

Taking profits is the deliberate act of selling Bitcoin in an effort to secure gains following a period of appreciation. As much as you’d like to see Bitcoin hit $100,000, there’s no way of knowing what will happen next, so decide if you want to take your profits and get out or stay put and maximize your gains. The worst thing you could do is wait until it’s too late and miss out on the cryptocurrency market peak. As opposed to HODLing, taking profits involves regular trading and market participation. Use both fundamental and technical analysis to know how and when to take Bitcoin profits and profit handsomely from volatility.

It’s a good idea to have a solid plan about what to do after a big win – don’t set yourself up for the loss by being greedy and hoping for another increase. You can sell portions of Bitcoin and hold another portion for later down the line. Most importantly, use limit sell orders (orders to sell Bitcoin at a specific price). The order will be executed only at the limit price or a higher one, so you have more control over the execution price of Bitcoin, especially if you don’t want to use a market order during periods of volatility. You can choose a timeframe for your limit order, which can last as little as 24 hours or as long as a month.

Maintain A Diversified Portfolio

Spreading your investments around means that the risk of your cryptocurrency portfolio isn’t concentrated in Bitcoin. You can leverage the growth of the cryptocurrency market in different segments. A diversified portfolio should and must include large-cap tokens (Ethereum, Cardano, BNB, Uniswap, etc.), new tokens, cryptocurrencies associated with DeFi projects, tokens associated with innovative technology, and so forth. You can protect your digital assets and earn profits by routinely rebalancing your investments. If you put all your eggs in one basket, you risk losing the value of your entire portfolio due to a market crash, a crypto winter, or an unforeseen malware attack. Spread your investment across exchanges to access a broader range of cryptocurrencies, reducing the risk of holding only a few coins.

Stay Disciplined & Don’t Be Swayed By FOMO

One of the most important aspects of Bitcoin trading is discipline, which involves setting clear goals, following a plan, and not being swayed by the fear of missing out (FOMO). Speaking of which, the cryptocurrency market tends to be driven by emotions instead of reason. FOMO is basically a sense of urgency to sell Bitcoin when everyone is talking about it, so it may motivate you to follow the crowd without fully understanding the risks involved. By overcoming your basic human desires, you can avoid a disaster, but this is easier said than done. Here are a few suggestions to keep in mind:

  • No single person’s advice is better than doing your own research and coming to your own conclusions
  • Only trade within your means
  • HODL and think long-term
  • Even if the crypto market is falling, there are opportunities if you know where to look

Invest The Total Amount Gradually

If you want to minimize risk during a bull market, it’s recommended to invest in phrases, as you can maintain distance from cryptocurrency market fluctuations and avoid selling Bitcoin at an inopportune time. Simply put, you enter the market bit by bit, which will give you better results than lump-sum investing. It’s a prudent way to get invested and stay invested during volatile markets. You can experience a loss in your portfolio due to a market downturn, but your losses will be offset by earlier buys. If your cash flow is such that you can only make periodic investments, you’ve got no choice but to invest gradually.

Make smaller, equal investments on an ongoing basis (weekly, biweekly, monthly) to reduce the impact of price volatility by leveling out the buying cost. Investing the entire lump sum can produce superior returns, but you might end up disappointed in the end. At any rate, you can build your position without having to follow the market all the time; this feature is available on some cryptocurrency exchanges. The order is placed and executed if it meets pre-existing conditions and parameters. Committing to investing gradually means that you’ll sometimes be investing when Bitcoin has dropped in value (during a bear market).

Track Bitcoin Performance and Taxes

In case you didn’t already know, you owe taxes on any amount of profit, even $1. Exchanges are required to report income of more than $600 for trading activities, but that doesn’t mean you’re exempt from paying taxes on smaller amounts. Monitor the performance of Bitcoin for tax purposes and start putting money aside. Your gains or losses may be short-term or long-term, depending on how long you’ve held Bitcoin before selling or exchanging it. If you fail to keep a transaction journal, there’s no reason to fret because you can use a block explorer that finds records of on-chain transactions.

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