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Bear Market Strategies for Investors in June 2024

The volatile downturn in the crypto market has caused many crypto indexes to plummet sharply and enter a bear market.
bitcoin bear market

Bitcoin Drops to $63400, the Lowest in Almost 6 Weeks

On June 21, Bitcoin traded around $63,000, down 4% from the previous week. Bitcoin’s price showed relatively stable movement, but other cryptocurrencies experienced significant declines.

During the same period, several cryptocurrencies saw substantial drops: Near fell by 20%, Avalanche by 15.5%, Filecoin by 18.5%, Injective by 28%, and Starknet by 32%.

“When investors lose optimism about the market or the economy, they tend to sell at lower prices to minimize risks. With the current instability, the market may struggle to show positive trends for at least the next few months,” said Jumper Exchange’s CEO.

According to CryptoQuant, Bitcoin’s price will likely continue fluctuating within a narrow range, reinforcing bearish sentiment among investors. They prefer to exit the market quickly, moving funds away from stocks to avoid financial losses. This could trigger massive coin sell-offs, further destabilizing the market.

Key Factors Bringing Stability to the Crypto Market in 2024

Despite the market downturn, CoinMinutes advises investors to stay calm, closely observe the market, and devise smart, appropriate strategies before making any decisions. We believe that the crypto market is showing early signs of positive momentum and is gradually improving this year, supported by several factors:

Huge amounts of money from spot Bitcoin ETFs

The Spot Bitcoin ETF is a crucial bridge to attract funds from the financial markets into the crypto space, especially following the bankruptcies of crypto banks during the 2022-2023 period. Since the approval of the Spot Bitcoin ETF on January 10, 2024, over $25 billion has flowed into the market, averaging about $418 million daily. According to Coinbase, daily trading volumes of Spot Bitcoin ETFs range from $4 to $5 billion, comprising 15-20% of total trading volume from centralized exchanges (CEXs).

In just over two months since its launch, Spot Bitcoin ETFs have accumulated over 180,000 BTC — three times the amount mined during the same period. Post-Halving 2024, daily Bitcoin issuance will halve to just 450 BTC, further tightening supply and potentially exerting upward pressure on prices in the post-Halving period.

Therefore, funds from the Bitcoin Spot ETFs are increasing buying pressure on BTC, which, combined with decreasing supply after the Halving event, could have a positive effect on the crypto market.

Favorable macroeconomic factors

The macroeconomic landscape of 2024 plays a crucial role in shaping long-term directions for both financial and crypto markets. This is underscored by Bitcoin’s recognition as a new asset class, finding its place in the investment portfolios of traditional funds. One of the key indicators influencing the market is the Federal Reserve’s interest rate expectations for 2024.

During the March 20th FOMC (Federal Open Market Committee) meeting, the Fed signaled upcoming interest rate cuts, prompting Bitcoin to rebound from around $60,000 to $68,000. With interest rates expected to decrease gradually, borrowing costs will be cheaper, boosting investment demand in risky asset classes like Bitcoin shortly.

These developments highlight how broader economic trends are shaping investor sentiment and asset allocation strategies, particularly in the evolving landscape of cryptocurrencies.

Investment Strategies in a Bear Market

Emotional Management

In a bear market, investors should manage their emotions to avoid risks during trading. Investors, especially newcomers (F0), often fall prey to FOMO (Fear Of Missing Out), buying at high prices during market euphoria and panic-selling at low prices when the market downturns.

Focus on Long-Term Projects

Typically, after each Bitcoin growth cycle, there follows a significant growth phase for Altcoins (phase 2). Pantera Capital explains this phenomenon by noting that investors tend to favor crypto projects with strong technological potential, aiming for higher returns than Bitcoin. During the ICO boom of 2015-2018 and the rise of DeFi, GameFi, and NFTs from 2018-2021, these sectors led the growth in the Altcoin market.

Despite projects disappearing after previous Halvings or cycles, the crypto market continues to show resilience and progress through continuous innovations. This is referred to as the Crypto-Price Innovation Cycle by a16z crypto, where Bitcoin’s price leads attention and capital, followed by technology. With thousands of Altcoin projects in the current market, investors need to stay vigilant and choose long-term projects to ride the next bull-run phase.

Reduce Margin Exposure

In a bearish market, investors should decrease margin exposure and increase cash holdings to preserve capital and avoid losses. As we enter phase 4 of this market cycle, stocks will begin to form price bases again. This is a critical time when investors will need capital to invest in promising stocks.

What Are the Prospects for Bitcoin in 2024?

The Bitcoin ecosystem has evolved significantly with notable innovations throughout its history as an asset class:

  • Namecoin (2011)
  • Colored Coins (2012)
  • Counterparty and Omni Layer (2014)
  • Lightning Network (2016)
  • Stacks (2021)
  • Ordinals (2022)
  • BRC-20s, BitVM, TARO (2023)

In addition to these developments, crucial updates like SegWit (2017) and Taproot (2021) have been continuously implemented by developers to unlock the immense potential of this digital currency.

These changes have laid the foundation for significant advancements such as Ordinals and Inscriptions by the end of 2022, facilitated through proposals like SegWit (BIP 141) and Taproot (BIP 341).

Leading up to 2023, Bitcoin’s scalability solutions mainly focused on State channels (Lightning Network) and Sidechains (Stacks, Liquid, Rootstock) due to technical limitations. However, following the Taproot update (2021) and the BitVM initiative (2023), Bitcoin can now interact with complex virtual machines like EVM, paving the way for Rollup scalability solutions on Bitcoin.

Once the foundational infrastructure is complete, the components of the application layer will play a role in creating experiences to attract users to the Bitcoin ecosystem and the crypto industry. The bear market serves as a catalyst prompting investors to reconsider their portfolios or accumulate a large quantity of coins at low prices to generate significant profits when entering a bullish market in the future.

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