How I learned to stop worrying and love the crypto bear market

This article is part of Crypto Insights, a segment by major crypto exchange Bybit that dives into the latest and most pertinent issues in the crypto space.

I’ve never really understood what people meant when they talked about “doomscrolling” on social media. Where is the doom? Is it the act of scrolling itself that leads to doom? Or does it only count if you’re focused on depressing stories?

Photo credit: Gerd Altmann

Crypto Twitter is certainly feeling pretty doom-laden these days. It seems to have become a venue for a “who can be more bearish” competition. But everyone is forgetting that bear markets are full of opportunities and are a healthy part of the market cycle.

For example, bear markets create cheaper assets. While we might not see US$4,000 per bitcoin again, its price has fallen dramatically from all-time highs – though it risks falling even further.

If you take an average from the drawdown in Bitcoin’s price from the previous two bear markets, you’re looking at an 81% reduction. This equates to a price of about US$10,000 per bitcoin, a further 45% decrease from the current price at the time of writing.

The potential reward, however, is that in a few years, we may reflect on this time and see it as a great entry point into the market.

That brings me to my second point. There has been a great deal of noise out there, and many of those involved in the tumult are not impartial. True, we all have biases, but in a nascent market, insight is sparse and speculation is rife, so it pays to be cautious.

Many pump and dump schemes have been exposed recently. This is where influencers are allocated free tokens by a new crypto project in exchange for shilling it on social media only for them to withdraw profits when the price increases.

I don’t miss the clamor of the bull market. The current climate gives me the space to assess and analyze, rather than react to influencers and their constant FOMO drumbeat.

These days, with things being quieter, it’s easier to see what projects are strong enough to weather the storm. It’s also easier to stick to tried-and-true methods like DCA-ing.

Another reason we have bear markets is they eliminate poor projects and clear away dead wood from the space. We have seen this process already with the implosion of Anchor Protocol, which took down over-leveraged firms like Three Arrows Capital – and its creditors – in its wake.

The bear market has also flushed out unsavory practices and Ponzi schemes like Wonderland Money, which was able to hide and thrive during the bull market.

Meanwhile, other projects like Redacted Cartel and Klima DAO have realigned their business plans and survived so far by pivoting to sustainable models like selling votes on Curve Finance and helping companies offset their carbon footprint, respectively.

Who doesn’t like freebies?