How to Survive a Bitcoin Bear Market
In this article:
Did you notice the recent Bitcoin dip?
Of course you did….
There’s been a lot of talk this year about “Omega Candles” and “Super-Cycles,” and you couldn’t scroll on social media for long before finding an extremely bullish price prediction.
Larry Fink suggested Bitcoin might reach $700k in 2025, Chamath Palihapitiya predicted we would hit $500k, and investment bank Standard Chartered were calling for $200k. Even Michael Saylor, who was a touch more conservative, thought Bitcoin would be trading at $150k by now.
Unfortunately, as the end of 2025 draws near, Bitcoin hasn’t managed to reach any of these lofty targets. Rather than heading straight for the “moon,” Bitcoin decided to treat us to a stomach-churning 36% correction instead. In just 6 weeks, the price tanked from over $126k to as low as just $80k!
For anyone who imbibed a little too much hopium, that’s gotta sting a little.
Unsurprisingly, this dip has shifted market sentiment significantly. Instead of scrolling through bullish price predictions, your feed will now be full of high-time-preference commentators debating whether or not Bitcoin is heading into yet another bear market.
Isn’t it amazing how quickly things can change?
It serves as a good reminder that people making price predictions in either direction are just guessing. Some might be making “educated” guesses, but ultimately nobody knows.
The future’s not ours to see.
Hopefully you subscribe to this newsletter because you’re looking for some light relief from the circus.
At The Bitcoin Way we aren’t in the business of making short-term or even medium-term price predictions. We have enough humility to recognize that trying to predict the price of Bitcoin is a fool’s errand.
As they say... “Technical analysis is just astrology for men.”
Instead we focus on the simple fact that over the long-term, Bitcoin will outperform the US dollar (and everything else), simply because it’s better money. We aren’t “speculating” on Bitcoin to end up with more dollars, we’re upgrading to Bitcoin to end up with more freedom and to protect our purchasing power.
So, was this just a temporary dip? Or are we about to head into another brutal bear market? We have no idea, but preparing for the worst and hoping for the best is rarely a bad strategy. So, this week let’s talk about how to steel your conviction and survive a Bitcoin bear market…
Review the Fundamentals
Surviving a bear market is largely about controlling your emotions. Having survived several ourselves, we know it can feel like a punch to the stomach watching your net worth plummet on paper.
That’s a totally natural response. Your savings are more than just money; they represent your dreams and aspirations for the future. It could be money that you’re setting aside for your retirement, or money to put toward your kid’s college fund. It’s normal to have an emotional response to those things feeling like they are under threat.
Nevertheless, if you allow your decisions to be governed by these emotions, you’re likely to fall into the trap of short-term thinking. Fear will keep you focused on near-term volatility, doubt will creep in, and amidst all the screeching on social media, it can become very difficult to remain rational.
To combat this, it pays dividends to get back to basics and review the fundamentals. Even a handful of simple questions can help:
- Will Central Banks continue to inflate the money supply?
Yes - Is that sustainable?
No - What does that mean for the value of fiat currencies over the long-term?
They will decline - Can anyone inflate the supply of Bitcoin?
No - Can governments or banks ban it, censor it, or confiscate Bitcoin?
No - With a limited supply vs. an infinite supply, will Bitcoin’s value appreciate or depreciate against the dollar?
We’ll let you be the judge…
In the same way that precious metals replaced seashells, Bitcoin is here to replace fiat money entirely. Jumping between the two is an extremely risky game to play. Sure, if your timing is right, you might end up with more Bitcoin. But if you get your timing wrong, there’s every chance you’ll be left holding seashells.
The fundamentals should remind you that “nothing stops this train,” so it’s probably not worth jumping off temporarily lest it suddenly decides to leave the station without you.
(If the recent price drop has you feeling sick to your stomach, you might find some value in this article discussing how to handle Bitcoin’s price volatility)
Check Your Time Horizon
Bitcoin isn’t a “get rich quick” scheme, it’s a “don’t get poor slowly” scheme. A tool to protect your purchasing power from constant debasement at the whim of central banks.
Understanding this is important because it will allow you to develop a sensible time horizon. Yes, Bitcoin will help you increase your purchasing power and grow your wealth, but it’s not going to happen overnight.
The dollar is dying… slowly:
And Bitcoin is replacing it… slowly:
This process is likely to take decades, and it’s going to be a bumpy ride along the way. If you came into Bitcoin thinking you’re going to “make a quick buck” then you’re doomed to fail. The short-term volatility will almost certainly shake you out, and ultimately, if you’re trying to chase more dollars, it suggests you still haven’t properly understood what Bitcoin is.
Bitcoin will always reward hodlers more than it rewards gamblers. If you can’t maintain conviction for more than a couple of years, you’re unlikely to have a good time.
(If you want some help developing a long-term time horizon you might find these articles helpful: A Bitcoiner’s Time Horizon is Centuries, Not Decades and You’re Still Early to Bitcoin, But How Early?)
Don’t Start Gambling
Despite being one of the more dangerous times to try and trade Bitcoin, periods of extreme price volatility seem to have a habit of luring otherwise “sensible” investors to take on more risk than they usually would.
This seems to happen for one of two reasons:
The first is that some people, buoyed on by bullish price predictions, will have gotten way out over their skis this past year. Thinking the “super cycle” was here and the market would never move against them, large swathes of people started introducing leverage into their Bitcoin strategy with things like Bitcoin-backed loans.
Inevitably, some will have gotten themselves overleveraged. If they took loans out at the $126k peak, today they may find themselves uncomfortably close to a margin call. If they can’t easily put their hands on more collateral, or their income drops and they can no longer service the debt, desperation can start to creep in.
The temptation to start making risky bets to save their stack begins to grow.
The second reason some people get themselves into trouble is not because the dip is causing them any financial duress, but because lower prices encourage them to start getting too greedy. Everyone wants to grow their Bitcoin stack, and aggressive dips can be tantalizing opportunities.
Dips are certainly great opportunities to increase your stack, but unfortunately, some people take “being greedy when others are fearful” a step too far. Unsatisfied with just getting a heavy discount on the world’s best form of money, they start to convince themselves that they can time the bottom. And if you think you can time the bottom, then you’re just one step away from convincing yourself you may as well introduce some leverage.
That’s a risky game to play. Yes, taking on leverage at $80k is certainly going to be lower risk than doing so at $126k, but hindsight is a wonderful thing. Just because Bitcoin has dropped 36% doesn’t mean it can’t drop another 40%.
A lot of people underestimate just how savage Bitcoin’s volatility can be. Remember FTX? From exchanges getting hacked or gambling their customers’ funds, to major geopolitical events, all sorts of unpredictable events can cause market-wide pandemonium.
A “sure bet” can quickly turn against you and you’re only ever one giant wick away from getting liquidated.
The smart strategy is to stay humble and stack sats. I have never met a person who dollar-cost averages (DCA’s) that hasn’t steadily grown wealthier over time. In a hare-and-tortoise race, it pays to be a tortoise.
Learn to Love the Bear – The Bitcoin Way
Bitcoin bear markets don’t have to be agonizing. If you have a low time preference, a sensible time horizon, and your priorities are in order, then there are a whole host of reasons that instead of feeling despair, you can learn to love the bear.
Not only do bear markets give you the opportunity to stack more sats at better prices, but you’ll also find they’re a lot quieter than bull markets. Speculators get scattered to the wind, shitcoiners fall silent, and the signal-to-noise ratio improves significantly.
If your goal is to learn more about Bitcoin and improve your skills, then the relative calm of a bear market is the perfect opportunity to do that. While other people are crying in the casino, you can gain a competitive advantage by spending your time productively.
Fortune favors the prepared.
There’s no telling if there’s a bear market around the corner or not, but if there is, your best course of action is to stay humble, stack sats, and keep going deeper down the rabbit hole.
Our experts can help. In just a few short training sessions they can 10x your knowledge and make sure you’re the kind of Bitcoiner who will stand the test of time, make good decisions, and secure your wealth for generations to come.
Book a free 30-minute call with us today to get started.