How to Make Money in a Bear Market: 7 Strategies Every Cryptocurrency Investor Must Know

Has the Bear Market Truly Arrived?

Cryptocurrency market cycles are cyclical, and this is normal. But when prices plummet more than 20%, traditional finance calls it a bear market. In the crypto world, a 90% drop is not uncommon. A true bear market should be understood as a period characterized by extremely low market confidence, continuous price decline, and selling pressure far exceeding buying interest.

The most famous “Crypto Winter” in history occurred from December 2017 to June 2019, when Bitcoin fell from $20,000 to $3,200. Such bear markets tend to occur roughly once every four years and usually last over a year. Understanding this pattern can help you prepare psychologically.

Since a bear market is unavoidable, why not learn to leverage it

Many people panic when they see unrealized losses in their accounts. But think calmly—bear markets are actually the best time to accumulate wealth. The following seven strategies can help you survive the “winter” better—even become wealthier.

Step 1: Hedge Your Positions

Don’t want to bear the psychological pressure of a sharp decline? You can use derivatives to hedge. The principle is simple: if you hold 1 million yuan worth of BTC, you can short an equivalent position in the futures market. What’s the result? Regardless of market fluctuations, your total assets remain unchanged. The only cost is trading fees, which are almost negligible for large transactions.

Futures and options are the most common hedging tools. They allow you to open both long and short positions simultaneously, profiting whether the market rises or falls. This risk management approach is suitable for all investors looking to reduce volatility.

Step 2: Diversify Your Portfolio

Putting all eggs in one basket is a cardinal rule of investing—and even more so during a bear market. Building a diversified portfolio helps spread risk.

By asset type: Bitcoin, as the most stable choice, offers a “safe haven” function. Institutional investors favor it precisely because of this. While it may not give you 10x returns, it won’t wipe you out overnight. Altcoins carry higher risks but also higher potential rewards. Stablecoins help maintain liquidity amid volatility.

By market cap: Large-cap projects (like Ethereum) provide stability; mid- and small-cap projects offer growth potential.

By sector: Layer-1, Layer-2, DeFi, GameFi, Web3, AI—different sectors perform differently. Do your homework, choose the sectors you believe in, and avoid putting all your funds into one direction.

Diversification can also extend beyond crypto. Stocks, bonds, real estate, commodities—mixing traditional assets with crypto can further reduce systemic risk.

Step 3: Dollar-Cost Averaging (DCA)

Dollar Cost Averaging sounds complex but is simple to execute. Invest a fixed amount weekly, say 1000 yuan, to buy BTC regardless of the price. What are the benefits?

• When the market crashes, you buy more coins with the same 1000 yuan
• When the market rebounds, you’ve accumulated enough chips
• You avoid the anxiety of “buying at the top and getting caught”

This is the power of DCA. Economists recommend beginners adopt this strategy, especially during bear markets. Even if your initial investment is small, sticking with it for a year or two can harness the power of compound interest.

Steps to implement: select target assets → determine fixed amount → set investment cycle → find a secure trading platform → start buying.

Step 4: Short to Profit from Bear Markets

Fewer people profit from going long during a bear market, but many profit from shorting. The principle is: borrow crypto assets, sell immediately, and buy back at a lower price to return the loan. The difference is your profit.

In practice, you just click “short” on the platform, and the system handles borrowing and selling for you. The key question is: when to close the position? Set a stop-loss to avoid big losses if the market moves against you.

Shorting is a double-edged sword. Used correctly, it’s a cash machine during bear markets; used poorly, it can lead to liquidation. Always be cautious and start with small positions to practice.

Step 5: HODL—The Most Simple Yet Effective Strategy

HODL originated from a typo but embodies the philosophy: believe in the long-term value of cryptocurrencies, ignore short-term fluctuations, and hold steadfast.

Who should HODL?

• Those who can’t do short-term trading. If you admit you don’t understand technical analysis or intraday trading, HODL is suitable.
• Those who genuinely believe in the crypto revolution. If you think blockchain will disrupt finance and cryptocurrencies will eventually replace fiat, HODL is for you.
• Those seeking to escape FOMO and FUD. During bear markets, news is everywhere—some jump off buildings, others shout “bottom is in.” HODL helps you avoid emotional turmoil.

HODLers focus on the next five or ten years, not today or tomorrow’s prices. This mindset can help you get through the darkest times.

Step 6: Set Stop-Loss Orders to Protect Capital

A stop-loss order is like an insurance policy for your investment. You set a price point; if the market falls below it, the system automatically sells.

Advantages:

• Limits your maximum loss
• Prevents emotional decision-making
• Ensures a clear exit plan

Disadvantages: a stop-loss can be triggered during rapid declines, forcing you out at the lowest point. But compared to holding without a stop-loss until bankruptcy, it’s still a smarter choice.

Step 7: Place Limit Orders to Catch Bottoms

Most retail investors never catch the bottom because declines happen suddenly, and crypto markets operate 24/7—you can’t monitor constantly.

Solution: set multiple limit buy orders at very low prices. For example, if BTC is at $50,000, you place buy orders at $40,000, $35,000, and $30,000.

Most of these orders may never fill. But if an extreme event occurs, you’ll be pleasantly surprised to buy at historical lows. This “unexpected bargain hunting” can significantly improve your investment returns.

Eternal Truths Investors Must Remember

Only invest what you can afford to lose. The crypto market is unpredictable. No matter how much analysis you do, it can still go wrong. Beginners should start small, observe the market, learn the trading interface, and accumulate experience. Never invest your entire net worth.

Keep learning continuously to prepare for the next rally. Follow news, study trends, participate in community discussions. Watch the moves of big players, analyze professional traders’ strategies. But most importantly, develop your own judgment rather than blindly following the crowd. Also, stay updated on regulatory developments. Operating compliantly is key to long-term survival.

Conduct thorough fundamental research. Before buying, read the White Paper, study tokenomics, and understand the team background. Good projects have clear goals and actionable roadmaps, not vague promises. Avoid being misled by hype or celebrity endorsements.

Safeguard your assets properly. With BTC now at $88,560, each coin is precious. Hardware wallets (like Ledger or Trezor) store your private keys offline, preventing hacking. If you hold a large amount, cold storage is essential. Exchanges, no matter how secure, are not as safe as self-custody wallets.

Set clear goals and risk tolerance. Why did you enter the crypto market initially? To multiply your investment fivefold in five years? Or to grow steadily? Once your goals are clear, stick to them. Use take-profit and stop-loss orders to let data rather than emotions guide your decisions.

Bear markets are not the end, but a new beginning

For experienced investors, bear markets are not scary. In fact, they are the best time to build positions. If you stay calm now and apply the right strategies, your wealth could have doubled by the next bull run.

This article’s seven steps—from hedging and diversification to DCA and shorting, to HODL and risk management—can help you survive, accumulate, and even profit during crypto bear markets. Remember: bear markets test investors’ psychological resilience and strategic execution. Proper risk management is the key to truly benefiting from market declines.

The pattern of the crypto market tells us that every dip contains the seed of the next rise. The key is whether you can survive until that moment.