Cryptocurrency investors have been on a wild ride over the past few months. Bitcoin and Ethereum, after having touched record all-time highs, have lost significant value. Bitcoin, the original cryptocurrency, continues to be in a downtrend and is expected to further consolidate its position in the near future. The outlook for the first quarter of 2022 is expected to be bullish. For more information visit the Profit Edge platform
So how long will the bears rule the crypto market? What factors are driving the current market? And how can you survive the bear market? Find the answers to these questions here.
The Crypto Bear Market – Outlook
Bitcoin seems to be the flagbearer of the current market trend. The cryptocurrency is expected to have a test of lower price levels in the range of $42,000 to $43,000. As long as it maintains this level, the outlook for Q1 2022 is expected to remain bullish.
Any drop beyond that is expected to create a bullish divergence. This may further cause a bottoming construction, leading to a trend reversal. However, the market has not yet reached there. It is expected that the market will continue to hold the current level of around $48,000.
Factors Driving the Current Market Down
The crypto market has a short-term sentiment of ‘fear’, while the longer-term sentiment is expected to be bullish. The key factors that are expected to drive the downward trend in cryptos are the following:
- Potential defaults by Chinese real estate corporations and the weakening of the Chinese stock market
- Potential rise in US interest rates because of rising inflation. It can weaken the stock market and potentially cryptocurrencies.
- Effect of the latest Covid-19 variant that is claimed to be super-spreader
The Coins to Watch Out For
While Bitcoin has been the biggest name in the cryptocurrency market, Ethereum has shown decisive strength more recently. It has consistently defended its $4,000 mark. If Bitcoin falls through $46,000, ETH is expected to go lower. It is expected that Ethereum’s market cap will cross Bitcoin’s at some point in the future. This is because Ethereum has a complete platform and ecosystem for DApps and Bitcoin’s proposition revolves around ‘storage of value’. However, Bitcoin still makes a lot of sense as a conservative investment. It tends to fall the least during a downward market spiral.
Surviving a Bear Market
A market cannot keep going in one direction forever. However, bear markets create unique opportunities and can help you correct the mistakes you have made. They also give you the chance to conduct research and prepare for market recovery.
With the bears expected to rule the crypto market for the next few months, it is important to know how to survive the trend. The following tips should guide you in taking the right steps:
i. Try & Stick to the Plan
If you are a cryptocurrency investor, it is important to learn how to stick to the plan when the market is going down. If you had planned that you will buy-in the moment a crypto’s price falls below a specific price, you should follow through on it. It is easy to create such plans when the market is doing well. Sticking to them can be difficult.
ii. Trust Cryptos with Strong Fundamentals
While the crypto market is full of opportunities and many projects can succeed, it is best to get invested in the ones that have strong fundamentals. They have a much greater chance of getting through a bear market and gaining value.
So, what are the factors that make strong fundamentals for cryptos? You should look for the following factors in a cryptocurrency:
- Value-adding support
- Strong partners & team
- High level of liquidity
- Excellent market fit
When a network meets these conditions, there is a high chance it will perform well when the market becomes bullish.
iii. Update Your Knowledge
Bearish crypto markets, like the current one, make it difficult to make profits. However, they do provide investors with a much-needed break from the frenzy in a bull market. Use the given time to:
- Study and understand the market
- Check what works for you and what doesn’t
- Get prepared for the coming bull market
Bitcoin has fallen by a significant amount since its all-time high during the summer this year. While that may not sound great to investors, there are signs that the selling is coming to an end. The market is expected to rebound soon, and you should make all the attempts to get prepared for the next rebound.