Recently, cryptocurrency has been causing quite a ruckus in the world of finance and investment. Back in 2009, nobody could have predicted that, this humble internet experiment, would one day grow into a global phenomenon, worth hundreds of thousands of dollars. Polls suggest that close to half of the American population invests in some form of cryptocurrency, with the most popular choices being Bitcoin, Ether, Ripple, and more recently, Dogecoin.
In the past month, the topic of a crypto bear market has been brought up. Long-time investors are used to this kind of rapid decline in price. However, as crypto is a relatively recent phenomenon, many crypto investors simply were not ready for such a dip in prices. So, let us talk about a bear market, and how, in certain cases, it might even yield an overall positive for the community.
Just What is a Bear Market?
To understand how a bear market might be a good thing, we first must define it. So, just what is a bear market? The term refers to a market, in which the prices have been declining in value for a prolonged period of time. It is usually used to talk about a market where the prices have fallen 20%, especially after they’ve seen a high, just before the sudden spike.
Many people who have opted to buy crypto in recent months, are now scared, and regretting their decisions. But, this may not be necessary at all. You see, in certain cases, a bear market can result in an overall net positive, not just for investors, but for the entire community in general. In this article, we are going to take a look at a few of the reasons as to why a bear market is beneficial for the community.
The Benefits of a Bear Market
The first reason, as espoused by many crypto analysts on the internet, is that a bear market works wonders for getting rid of “the deadweight” in the community. When prices drop, the activity on the market decreases. This leads to scammers and forgers to look for a new ground. Better yet, fewer new participants enter the market during this time, meaning that the competition is drastically decreased.
Another reason for why a bear market might be good, is that it allows the community to build a better base. The price of Bitcoin (and crypto in general) is very volatile, so a spike today might be followed by a surge tomorrow. As they say, the winners of the bull market are those that toiled in the bear market.
Which leads us to our final point. A bear market is when most of the successful crypto investors do a bulk of their investing. Buying up assets when the market is cold, results in higher withdrawals when it gets hot again. If one were to take a look at the price of Bitcoin, throughout the crypto’s history, one would notice that, this is not the first (and very likely won’t be the last) time that the market has experienced a serious dip.
Most long-time investors will tell you, that the important thing to do, during a bear market, is retain a cool head. It is understandable that people who’ve invested in Bitcoin might get nervous, when they see the price drop. However, remember that, there have been times in the history of crypto, that a price drop has been followed up by a serious surge. Naturally, you should always do what you feel is right with your assets, but before you make a decision, inform yourself on the history of finance and investment, and think about all of the possibilities that are available to you.