In a bear market, how to layout? A guide to deep self-rescue and low-position allocation after the crash of the virtual currency market + Binance referral code [BTC45]
When the virtual currency market falls into the whirlpool of a crash, panic spreads like a plague. Opening an account and seeing the numbers shrink continuously, this feeling is something every participant can deeply relate to. We often ask ourselves: Is the end of the world here? Should we cut our losses and leave, or should we grit our teeth and persist?
However, the history of the market tells us a cruel and true law: every redistribution of wealth occurs in extreme panic. For those investors eager to participate in this industry long-term, a crash is not just a simple loss; it is a rare opportunity for 'low-price purchases' actively provided by the market.
The market crash is a litmus test for investors' character and strategy. True opportunities quietly emerge when everyone is selling and the media is amplifying pessimistic sentiments. If you can remain calm at this critical moment and deploy a reasonable investment strategy, you are accumulating strength for the next cycle's explosion.
Our core task today is to extricate ourselves from the mire of emotions, using clear investment logic to interpret this crash and formulate a scientific, humane low-position configuration plan.
1. Recognizing the essence of a crash: A necessary phase for the market's self-purification
Many novices view crashes as failures, while experienced investors see them as part of the cycle. We must understand that market crashes are not sudden events but the release of long-accumulated risks.
Clearing high leverage: The most direct effect of a crash is to purge the speculators who excessively use leverage in the market. When prices fall rapidly, forced liquidations create secondary selling pressure, bringing the market back to rationality.
Eliminate low-quality projects: In a bull market, many projects lacking real value and technical support will rise with the tide. A bear market, especially during a crash, is the ruthless elimination process of these 'air coins.' Only projects with real technology, community, and vision can survive.
Squeeze valuation bubbles: The crash brings the prices of assets that were overly hyped in the bull market back to more reasonable levels, providing long-term investors with more cost-effective entry points.
Investment logic: A crash is the 'clearance discount' the market offers us. Instead of complaining, think about how to utilize this discount to optimize your asset structure.
2. The three golden principles of low-position layout
Buying in times of market panic is easier said than done. Here are the three core principles that must be followed during low-position configurations, which can help you combat human weaknesses:
Principle 1: Refuse to go all-in, insist on dollar-cost averaging (DCA philosophy)
Trying to catch the absolute bottom is a dangerous and nearly impossible task. Many investors invest all their funds at once out of fear of missing the lowest point, resulting in 'buying halfway up the mountain.'
The correct approach is to use the dollar-cost averaging method (DCA), which involves regularly and gradually investing funds.
Step-by-step deployment: Divide the funds prepared for low-position building into at least 5 to 10 parts, set price ranges, and invest one part every so often or every time it hits a key support level.
Reduce emotional impact: DCA allows you to avoid constantly monitoring the candlestick charts, effectively reducing the influence of emotional fluctuations on investment decisions.
Little by little: The duration of a bear market is often long, and dollar-cost averaging allows you to continuously accumulate chips throughout the entire bottom area, naturally lowering the average holding cost.
Principle 2: Focus on value, filter out noise
During the low-position configuration phase, we must be more selective than in a bull market. Funds are limited and must be directed towards the most viable and certain projects.
Prioritize:
Industry cornerstone: For example, Bitcoin (BTC) has withstood multiple cycles and is the consensus foundation of digital gold.
Ecosystem leader: For example, Ethereum (ETH), whose status as a smart contract platform is hard to shake, is the infrastructure for the entire decentralized finance (DeFi).
With practical applications and innovations: Choose high-quality projects that are still actively developing with actual user growth and clear business models, even during bear markets.
Hedging warning: During market crashes, greatly reduce attention and investment in high-risk, high-volatility, narrative-driven small coins, focusing main efforts on 'big and strong' assets.
Principle 3: Leave enough 'ammunition' for flexible responses
In the cryptocurrency market, there is no minimum, only lower. An excellent investor will never let their account be in a state of 'running out of ammo.'
You should always keep a portion of liquid assets (such as stablecoins or cash) in your investment portfolio. The role of this portion of funds is:
When unexpected black swan events occur, it is possible to seize the opportunity when prices fall below expected support levels.
To cope with urgent expenses in life, avoid being forced to sell assets at market lows.
Risk warning: The primary principle of capital management is—never use funds that impact your life for investment. Ensure that your 'ammunition' consists of idle funds.
3. How to determine the 'best buying range'? Combining sentiment and data
Although we emphasize dollar-cost averaging, understanding the extreme indicators of market sentiment helps us execute more efficient large-scale dollar-cost averaging deployments.
We cannot accurately predict prices, but we can identify the degree of market panic. When the market panic index reaches the 'extreme panic' level, social media is filled with statements like 'never recover,' and even some industry leaders begin to question the future of the industry, this often represents the best long-term buying zone in history.
Case analysis: Looking back over the past decade, whether at the bottom of the 2018 bear market or during the liquidity crisis in March 2020, those who dared to intervene at the freezing point of market sentiment achieved excess returns. Their commonality was not predicting the lowest price but possessing the courage and sufficient capital reserves to act contrarily amid collective panic.
4. Confidence in the cyclical transition: Facing the next bull market
Investing is a marathon, not a sprint. For emerging asset classes like virtual currencies, volatility is significant, but the potential for growth is also extremely vast.
A bear market is the stage that tests patience and confidence the most. If you have studied the long-term potential of crypto technology and believe that the trend of decentralization is irreversible, then the paper losses you are currently bearing are merely the foundation for future gains.
A crash is not the end but an excellent window period for us to filter quality assets, optimize holding structures, and reduce average costs. Please keep a clear mind, adhere to strict capital management discipline, and set your sights on the future 3 to 5 years.
When the next bull market arrives, you will thank yourself for every rational decision made during this market crash.
Investment proverb: Fear when others are greedy, be greedy when others are fearful.
(Note: The content of this article is for reference and communication only, and does not constitute any investment advice. The risks of investing in virtual currencies are extremely high, please make cautious decisions based on a full understanding of risks.)