Cryptocurrency Trading Strategies Best for a Bear Market

Handy Tips / 13.04.2021

A bear market occurs when there is a progressive downtrend for a specified period. Trading cryptos without a plan wish your hard-earned money away because of the market’s volatility. With bearish markets, trading strategies vary, and they are a new trader’s worst nightmare.

Bear markets are what differentiate wannabes from experienced crypto traders. They command discipline, knowledge, and profits for resilient traders. This guide seeks to find the best tips on approaching a bearish market to overcome the main obstacles –strategies, diversification, shorting, margin trading, scalping, and more.

Enhance your Technical Analysis

The one thing bear markets are suitable for is homework. The advantages of technical analysis may be debatable, but no trader of sound mind would consider a trade margin with no basic understanding of the trade. Simple analysis such as RSI and moving averages should lead the way, followed by other complex ones such as Fibonacci, Ichimoku, and others.

Most traders have a life away from the trading screens, and thus it is highly likely that they do not have the time to become technical analysis pros. Getting a grasp of the basic technical analysis methods helps one better time their exit and entry positions.


This term is often used to refer to beginners because everyone’s first thought is a misspelling. This was often true back in the day when the word was invented. However, today, it is an accepted term for crypto investments. Fascinatingly enough, it translated the acronym ‘HODL’ to mean ‘Hold On For Dear Life.

HODL means that traders do not sell their coins even when the bear market moves deeply into the red. In simple terms, this is a trading strategy commonly used by people who are patient and using a long-term strategy. Most investors believe that the current low prices and volatility of cryptos settled because the market is still new.

HODLing is now a huge part of the crypto culture and has become a popular philosophy for new investors. It can also use the strategy in other markets, and the only downside is that the future is difficult to tell. However, famous investors like Jay Smith still vouch for it: he even commented that he believes cryptocurrencies will replace the old stock market.

Margin Trading

Margin trading is when one buys and sells cryptocurrency or any other investment type with borrowed money. Therefore, users go into debt to trade. It is commonly referred to as short. Shorting is also referred to as short selling or short position and occurs when a trader borrows shares and sells them, hoping/predicting a decrease in the stock price in the future.

Cryptos such as Bitmex, Okex, and Poloniex offers a great way of profiting in the bear market. Users do not need to be professionals to gain massive profits from margin trading. All you need is to do it right! Master the basics of charting, and you will start making consistent profits with this trading strategy.

By shorting, traders can efficiently sell and profit from assets they do not truly own. The borrowed assets are sold at prevailing market prices, which is all that short trade is about. Short selling is also used for hedging. If one holds a considerable amount of an asset, say Bitcoin, they can open a short position to reduce volatility.

For instance: shorting $2,000 worth of coins with a 10X leverage will wipe out your balance after reaching +10%. Ensure you keep this in mind if you opt to use higher leverage. Margin trading has excellent rewards but only for people with an in-depth understanding of technical analysis basics.


Unpredictable markets offer the chance to make money by creating profits off the small price changes. Scalping is often a smash-and-grab type of job that needs the willingness to grind out through frequent buying and selling, as well as a lot of free time.

However, it does have its perils like other strategies. It only takes one major fail that can frustrate your entire day’s hard-earned buck.

Buy Low, Sell High

Typically, a trader aims to profit off a market. Thus when the value of cryptos starts dropping, most of them withdraw from the market. A countable few are willing to stay and risk buying more even when the prices are low.

Most traders buy close to the bottom and sell close to the bottom. This strategy can be attributed to the human nature of risk. While most investors panic to sell the coins they had bought near the top, and others are willing to average down the price. Like always, any investor ought to do good research before committing to buying any coin in the market.

Automated Trading

At times, the market possesses a lot of unforeseen risks with the numerous strategies one can use. Newbies and even professionals may opt to take a directional risk using Automated trading systems in such situations. What differentiates them from beginners is automated trading and using bots which is gradually becoming popular.

Most traders use stop-loss, which is a great thing, but this is not creating more winning chances. The same tool can be applied to trigger trades, especially when using a trailing stop. Trailing stop triggers new trades and automates the process, significantly reducing the need for checking prices frequently.


Diversifying your portfolio is a great strategy for traders in general. Allocating and practicing often. Trading crypto bear markets can be straightforward, depending on how informed you are.

Finally, always maintain a good work, exercise, trade, and rest balance. Wake up each day with a precise aim in mind while not neglecting your life and family. A good balance is crucial to achieving your ultimate trading goals. With that, you are now ready to profit from the bear markets.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.