What to do when the bear market arrives? 7 practical strategies to prevent losses and even profit

When the crypto market enters a bear cycle, many investors fall into panic. Prices plummet, morale drops, traders become cautious and wait-and-see — this state is indeed uncomfortable. But did you know? The real money-making opportunities are often hidden in the moments when others are most afraid.

First, understand: What is a true bear market?

Many people’s understanding of a bear market still stops at a 20% decline. But in the crypto world, this standard simply doesn’t apply. A bear market here could mean a 90% drop — sounds terrifying, but this is normal.

To be precise, a crypto bear market is a long-term period during which market confidence collapses, prices continue to decline, and selling pressure far exceeds buying demand. Economic activity shrinks, and the entire industry is gasping for air. The famous “Crypto Winter” (December 2017 to June 2019) is a classic example, with Bitcoin falling from $20,000 to $3,200.

This situation occurs roughly every four years and usually lasts more than a year. So, preparing investment strategies in advance is really necessary.

What can you do in a bear market? 7 survival tips

1. HODL — The simplest way to survive

HODL originates from a typo and is short for “hold on for dear life,” but in the crypto circle, it has become a belief.

The core logic is simple: Buy good assets and never sell regardless of market turbulence. True HODLers are not scared by short-term fluctuations; they believe crypto is the future, and the market will eventually reverse.

When to HODL? Almost anytime. Especially:

• You lack time or ability for short-term trading (day trading, high-frequency trading are too complex)
• You have genuine confidence in this industry, believing it will disrupt traditional finance
• You want to completely avoid the psychological traps of FOMO and FUD

The key is mindset: HODL is not just a buying strategy but a belief in crypto’s future. Focus on long-term prospects and ignore short-term noise.

2. DCA (Dollar-Cost Averaging) — A smart way to diversify risk

DCA is popular in both traditional finance and crypto markets. The principle is straightforward: Invest a fixed amount regularly, regardless of market conditions, in a mechanical way.

Why is it effective? Because it automatically results in buying less at high prices and more at low prices, averaging out costs over time.

How to do it:

• Choose an asset you believe in (e.g., BTC)
• Set a fixed investment amount (e.g., $100 each time)
• Decide on a frequency (e.g., once a week)
• Use a reliable trading platform to set up automatic investments

Especially suitable for three types of people:

• Beginners who lack time to study market rhythms
• Those with unstable psychology who get anxious watching candlesticks
• Investors battered by the bear market, doubting everything

With DCA, you can buy heavily at the lowest prices, and when the bull market arrives, profits will come naturally.

3. Diversification — Don’t put all eggs in one basket

This is a fundamental rule in crypto investing. Spreading funds across different asset types can significantly reduce overall risk.

How to diversify? Several dimensions:

By asset type:

• Bitcoin: The “safe haven” in crypto, favored by institutional investors, with relatively moderate volatility
• Mainstream coins (Ethereum, etc.): Moderate risk and moderate gains
• Altcoins: High risk, high reward, but also possible to go to zero
• Stablecoins: A “safe harbor” during bear markets, waiting for opportunities
• NFTs and tokens: More imagination space, but require professional insight

By market cap:

• Large-cap projects: Stable but limited upside
• Mid-cap projects: Balanced risk and reward
• Small-cap projects: More doubling opportunities but also higher risk of losing everything

By sector: Layer-1 blockchains, Layer-2 scaling solutions, DeFi, GameFi, AI, Metaverse, etc. — each sector has different risk-reward profiles.

The key is doing homework:

• Study each project’s whitepaper to understand the problems it aims to solve
• Analyze tokenomics to judge long-term value preservation
• Review price history to beware of “pump and dump” traps
• Understand the operational team and past achievements

A good diversified portfolio allows you to enjoy bull market profits while surviving more comfortably in bear markets.

4. Short selling — Making money in decline

In a bear market, just buying the dip isn’t enough. Bold investors choose to short sell — profit from market downturns.

The principle: Borrow assets → Sell immediately → Wait for price to fall → Buy back → Return to lender → Pocket the difference.

Simply put, “bet on the price falling.”

The advantage of short selling is obvious: bear markets are your playground. When others are losing money, you make money. The downside: risks are huge. If the market moves against you, losses are unlimited.

Short selling is not for beginners. Only if you truly understand the market, have strict stop-loss discipline, and can bear extreme losses should you try.

5. Hedging — Protect your principal

Instead of making money from shorting, hedging offers a safer defensive strategy.

For example, you hold a lot of BTC but fear it will keep falling. You can simultaneously short an equivalent amount of BTC in the futures market. This way:

• If BTC drops: the short position profits, offsetting spot losses
• If BTC rises: spot holdings profit, short position incurs small losses

The result is: your principal is locked in, avoiding big losses and big gains — but at least you survive.

Hedging is suitable for:

• Those with large assets who want to avoid big risks
• Bear markets, when survival is the priority over big rebounds
• Those needing time to plan their next move

6. Limit orders — Wait for the fish to bite

Many traders have a problem: they can never catch the “bottom.” When prices suddenly crash, by the time they react, the rebound has already started.

A clever method is to set multiple limit buy orders at seemingly impossible low prices.

For example, if BTC is at $45,000, you place buy orders at $30,000, $25,000, and $20,000, and wait. When the market crashes to those levels, orders will execute automatically. You probably won’t buy at the absolute bottom, but you can get in at much lower prices.

The beauty of this trick: zero cost, zero risk, fully automatic. At worst, the orders never fill, and there’s no loss.

7. Stop-loss orders — Give yourself an insurance

If limit orders are active offense, then stop-loss orders are passive defense.

Stop-loss orders are your safety fuse: When the price drops to a level you can accept, they automatically close the position, locking in losses.

Benefits:

• Prevent unnecessary losses caused by momentary softness
• Avoid being trapped for years
• Make trading more disciplined and emotions more stable

Three additional life-saving rules

Besides these 7 strategies, some universal wisdom must be remembered:

Only invest what you can afford to lose. The crypto market is extremely risky; even with thorough research, black swan events can catch you off guard. Beginners should start small, learn as they go.

Keep learning continuously, preparing for the next cycle. Follow industry news, analyze on-chain data, read opinions from big influencers, watch whale movements. But most importantly: think independently, don’t follow blindly. Also, stay aware of regulatory trends to avoid legal issues.

Do thorough research before acting. Read project whitepapers, analyze token distribution, examine team backgrounds. Don’t be swayed by social media FOMO or fooled by certain “insider info.”

Store your coins securely. Exchanges are convenient but unsafe. Hardware wallets (cold wallets) are the right choice for long-term storage of large assets. Keep your private keys tightly in your own hands for peace of mind.

Set realistic goals and know your risk tolerance. Don’t be fooled by stories of overnight riches on social media. Set clear take-profit and stop-loss orders, and let mechanisms rather than emotions guide your decisions.

Final words

A bear market is hell for beginners but a paradise for veterans. The key is mindset and strategy.

If you can stay calm, stick to discipline, and keep learning, then a bear market is not a disaster but a low-cost opportunity to position and accumulate chips. Many financially free investors bought the bottom when most people were despairing.

The crypto market cycle is eternal: when the bear comes, a bull will follow; and the bull will eventually return to the bear. The point is to live until the next bull market arrives. With the right strategies, risk management, and preparation, you can not only survive but thrive.