Bear Markets and Building Back Better

Many crypto investors view a bearish market climate as nothing more than a moment to run for the hills. Still, there are valid reasons why such seemingly adverse conditions can actually represent excellent opportunities.

Right now we’re in what looks to be a relief rally within a broader bear market. Perhaps, we’re set for a Q1 run of epic good fortune. Nobody knows for sure. However, bear markets don’t have to be all bad. They can actually be a good thing when it comes to solidifying the foundations of a great project. Let’s quickly examine what Ron and Tom at Crypto Lists have to say.

Taking the Right Perspective

“We can rebuild him. We have the technology. We can make him better than he was. Better. Stronger. Faster.”

Some of you might recognize this quotation from the beginning of the famous television series The Six Million Dollar Man. The title character Steve Austin suffered a nearly fatal accident. In many ways, he experienced his very own “bear market” from a physical perspective. However, his fundamentals were strong and a group of scientists (who we will call “investors” for the sake of argument) realized the potential opportunity to create something than was greater than the sum of its original parts. Within moments, a viral 1970s franchise was created.

It’s not entirely unreasonable to embrace the same set of principles when discussing the current bearish cryptocurrency outlook. In other words, those who are able to look beyond the proverbial clouds are likely to encounter a silver lining. This is the very same reason why seasoned experts such as Peter Lynch associate bear markets with a potential for growth as opposed to nothing more than a buyer-beware landscape (1).

Simply stated, psychology plays a crucial role in terms of knowing when an opportunity presents itself. Of course, Crypto Lists appreciates that even novice cryptocurrency enthusiasts are well aware of this fact. We’ll therefore need to dig a bit deeper to fully understand the upsides of a bearish climate.

Weeding Out the Trash

OK…the term “trash” may be a bit harsh. We should still remember that the crypto marketplace has suffered several setbacks due to the actions of only a handful of individuals and entities. From the guru-turned-pariah Sam Bankman-Fried to the subsequent collapse of FTX like a house of flimsy cards, currencies such as Solana have seen better days. So, why do some online portals predict that the price of SOL could test $23 dollars by Q2 2023?

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One reason involves how bearish markets tend to expose bad-faith actors and to dissuade short-term positions. Smart money will instead shift to the fundamentals; focusing upon the core traits of the project in question. Once again referring to Solana, Ethereum founder Vitalik Buterin states that a number of developers are keen to become involved in the Solana ecosystem (2). This has increased positive sentiment due to the fact that opportunistic elements have been taken out of the equation. In other words, a more bullish stance might not be far off.

“I personally think the future is bright too, for Solana. I agree with Vitalik. There’s still such a buzz about the future of the network and the ambitions of the project, that I think the bear market and the FTX fallout might end up being somewhat of a blessing in disguise when we look back five years from now.”

– Tom White, Head of Content, Crypto Lists

Fundamental as Opposed to Technical

Another advantage of becoming involved when the bears are rampant involves the trading principles themselves. Historically, investors tend to focus more on the fundamentals of an asset once the markets become pear-shaped. This often arises from the long-term nature of fundamental trading when compared to the short-term positions associated with technical analyses.

Those who become involved are therefore more likely to look towards the horizon as opposed to cut and run at the first sign of trouble. This provides the underlying asset with a greater degree of stability and (hopefully) the momentum required to move forward.

The Glass is Half Full

There are other reasons why these current bear markets are set to create a future bullish climate. Due to increased scrutiny in terms of potential opportunities, investors are more likely to gravitate towards solid prospects and shrug off get-rich-quick schemes. This also provides legitimate companies with a chance to improve their worth by refocusing internal efforts and performing due diligence. Here are some additional factors that could provide further momentum:

• An increased public appreciation of cryptocurrency opportunities.
• The rise of related sectors such as crypto-powered casinos and similar portals accepting blockchain transactions.
• The possibility that government regulations may provide a degree of market stability.

Let’s also note that the same principles outlined above apply to every asset class as opposed to cryptocurrencies alone.

Of course, the traders staying up to date with Crypto Lists can’t deny the fact that a truly bullish climate might take a bit of time to develop. Having said this, becoming involved on the ground floor is always the best way to build a solid foundation for the future.

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Sources:

1. https://novelinvestor.com/quote-category/bear-market/
2. https://twitter.com/vitalikbuterin