Seven Proven Methods to Overcome a Bearish Trend in the Cryptocurrency Market

Cryptocurrency markets are cyclical. Upward periods are followed by downturns, and this is a natural part of digital asset development. During a bear market, crypto investors often experience stress — prices fall, confidence is shaken, and positions need to be closed. However, these challenging periods also hold opportunities for those who understand how to leverage them.

Unlike traditional financial markets, the cryptocurrency sector can lose 90% of its value during bearish cycles. History remembers the “crypto winter” of 2017–2019, when Bitcoin dropped from $20 000 to $3 200. Today, with Bitcoin around $88.63K, many forget such declines, but cyclicality remains an unchanging law of the market.

In this article, you will learn about seven practical approaches that not only help survive a bear market but also strengthen your portfolio.

What is meant by a bear market in crypto

Many confuse a 20% drop with a true bearish trend. For traditional finance, this might be a starting point, but the crypto market operates differently.

A crypto bear market is a prolonged period when:

• Market confidence is at a minimum
• Asset supply exceeds demand
• Prices show significant decline (often 50-90%)
• Economic activity in the sector slows down

Such phases occur approximately every four years and usually last more than a year. This is a regular reality for crypto investors, so having a pre-prepared strategy is essential.

How to act when the market shows red figures

The first rule — keep a cool head. Panic and emotions are enemies of profitable investing. Instead of succumbing to fear, take specific steps to protect and grow your capital.

Strategy 1: HODL as an ideology

HODL (Hold on for Dear Life) is not just a tactic of holding a position. It’s an investment philosophy born in the crypto community due to a typo in the word “hold,” which evolved into a full-fledged investment approach.

A HODLer is an investor who remains loyal to their assets despite volatility, drops, and media hype. This is a choice for those who:

• Are not ready for active trading (scalping, day trading)
• Truly believe in the future of the crypto industry
• Are willing to ignore short-term fluctuations in narrative

HODL protects against FOMO (fear of missing out) and FUD (fear, uncertainty, doubt). Instead of flitting between buying and selling, the HODLer focuses on long-term potential.

This strategy is always suitable, especially in a bear market when prices seem unjustifiably low. If you believe in the technology, then a dip is just a temporary stage.

Strategy 2: Dollar-cost averaging (DCA)

If HODL requires psychological resilience, then dollar-cost averaging offers a mechanical, calmer approach.

DCA means regularly investing a fixed amount into one or several assets regardless of current price. Instead of trying to catch the bottom, you simply buy consistently.

How to implement DCA:

1. Choose an asset or a set of assets (BTC, ETH, or a diversified portfolio)
2. Set a fixed amount for each purchase (for example, $100)
3. Determine the periodicity (every Monday, the first day of the month, etc.)
4. Use a reliable exchange and secure storage

The advantage of this method: when the market falls, your $100 purchases buy more crypto than during growth periods. Over time, this lowers the average purchase price and reduces psychological pressure from volatility.

Experts especially recommend DCA to beginners and those who lack time for market analysis. But it’s also a strategy for experienced traders who understand the power of regular investing.

Strategy 3: Reasonable diversification of the portfolio

A well-balanced portfolio is the first line of defense against market shocks.

Diversification means distributing assets across different categories to reduce overall risk. Here’s how to structure your portfolio:

By asset types:

• Bitcoin — the anchor of the portfolio. BTC has firmly established its status as “digital gold” thanks to limited supply and institutional interest. During a bear market, it is less volatile than altcoins.

• Altcoins — more risky but potentially more profitable assets. They can be divided into blockchain coins, utility tokens, meme tokens.

• Stablecoins — safe-haven anchors, which can be held in anticipation of buying opportunities.

• NFTs and Web3 tokens — specialized segment providing access to the metaverse, GameFi, and digital art.

By market capitalization:

Large assets (large-cap) provide stability but slow growth. Mid-cap (mid-cap) and small-cap (small-cap) offer higher potential but with greater risk.

By sectors:

Distribute investments among PoW, Layer-1, Layer-2, DeFi, AI, AR/VR, and other directions. The crypto market moves synchronously, but individual sectors show different returns.

Before investing in any project, study:

• White Paper — understanding the technology and project vision
• Tokenomics — token distribution model and incentives for users
• Price history — growth trends, drops, signs of manipulation (pump-and-dump schemes)

Strategy 4: Shorting to profit from declines

A crypto bear market opens opportunities to earn not only from growth but also from falling prices.

Shorting is a process of:

1. Borrowing cryptocurrency
2. Immediately selling at the current price
3. Buying back at a lower price
4. Returning the borrowed amount and profiting from the difference

In practice, it works as betting on price decline via futures contracts.

Important warning: shorting is a complex and risky strategy. Losses can be unlimited if the market unexpectedly rises. This tool is for experienced traders, not beginners.

Strategy 5: Hedging positions

If you hold a large amount of Bitcoin or another asset and fear further decline, hedging can protect your investment.

The essence is simple: open a short position (short) on the same amount as your long position (long). Thus, any price drop is offset by profit from the short.

Example:

• You hold 1 BTC (long) bought at $50 000
• You open a short on 1 BTC via futures
• If the price drops to $40 000, you lose $10 000 on the long, but earn $10 000 on the short
• The only loss is transaction fees, which are minimal

Futures and options are the two main derivatives for hedging. Both allow opening long and short positions with agreed strike prices for future dates.

Strategy 6: Limit orders for deep dips

Professional traders use a simple but effective method: placing multiple limit buy orders at very low levels.

The chance to catch the exact bottom of the market is negligible — declines happen instantly, and crypto markets operate 24/7. But if you set limit orders during drops of every 5-10%, some will definitely trigger.

Result: you buy crypto at significantly lower prices than most market participants, almost without active monitoring.

Strategy 7: Stop-loss orders as a safety net

A stop-loss is an automatic sell order triggered if the price falls below a set level.

This is an emotional safeguard: a clearly defined exit point helps avoid panic and irrationally holding “dead positions” for years.

Advantages:

• Protection from catastrophic losses
• Discipline in trading system
• Prevention of emotional decisions
• Simplifies portfolio management

When triggered, the stop-loss executes as a market or limit order, ensuring you don’t remain in a position during a sharp fall.

Additional principles for overcoming a crypto bear market

Invest only accessible capital

The crypto market is unpredictable. Even experienced investors sometimes lose. The main rule: do not invest money you might need for living expenses. Start with small amounts, learn the exchange interfaces, gain practical experience.

Continuous learning and adaptation

A crypto bear market is a time for education, not self-flagellation. Read news, follow analyst tweets, study posts on Reddit and other communities, observe “whale” behavior (large holders). It’s especially important to monitor regulatory changes — new laws can threaten or open opportunities.

Careful project due diligence

Before investing in an altcoin:

• Study White Paper
• Understand tokenomics
• Research the team and their previous projects
• Look for signs of manipulation in price history

Avoid investing based on hype or sympathy for an idea. The project should have a clear goal and a mechanism to achieve it.

Storage security

Cold wallets (hardware wallets like Ledger or Trezor) store private keys offline, protecting against hackers. This is especially important for long-term holdings during bear cycles.

Clear goals and risk management

Set specific goals:

• How much percentage are you willing to lose without panic?
• What is the minimum price for your assets — the exit point?
• What long-term portfolio income should come from dividends or staking?

Use Take-Profit (profit-taking) and Stop-Loss (loss limiting) orders to maintain discipline and prevent emotional trading.

Conclusion

Bear markets are not an anomaly in the crypto sector but its natural part. They occur every four years and last more than a year, testing investors’ faith and the wisdom of their strategies.

Those who know how to act during a crypto bear market often emerge from the downturn with more assets than they started with. This is achieved through a combination of HODL philosophy for long-term assets, DCA for regular accumulation, portfolio diversification, risk hedging, and automated orders.

Crypto bear markets are a challenge but also a great opportunity. Proper risk management, discipline, and knowledge of strategies allow not just to survive the decline but to use it to strengthen your position. The seven methods described above are proven tools to help you navigate difficult conditions and prepare for the next growth cycle.