How to Make Money with Cryptocurrencies During a Bear Market: 7 Proven Approaches

The fall in crypto asset prices is not the end but the beginning of new opportunities. When Bitcoin (BTC) crashes from historic highs and altcoins lose 70-90% of their value, most traders panic. But experienced investors know: losing periods are times to act. In this material, we will analyze how to behave correctly during a downturn and what can be profitable when the market is in the red zone.

Why bear cycles are normal for crypto

The cryptocurrency market operates cyclically. Growth periods are followed by decline periods — this is an inevitable part of financial markets. Long-term data shows: a typical cycle lasts about four years, and the decline phase can stretch for 12-18 months.

What happens during a bear cycle:

• prices lose 20-90% from peaks
• trading volumes decline, but volatility remains high
• investor optimism transforms into fear
• supply exceeds demand

A classic example is the “crypto winter” of 2017-2019, when Bitcoin fell from $20,000 to $3,200. It seemed like the end of the industry. But those who continued accumulating assets during this period gained 20x profit in the next cycle.

7 ways to profit in a falling market

1. Long-term holding strategy (HODL)

HODL is more than just a tactic; it’s an ideology. The term originated from a typo of the word “hold” in the crypto community and literally means: “hold on as if for salvation.”

The essence is simple: you buy a crypto asset and hold it regardless of short-term price fluctuations. HODLers are investors who believe in the long-term potential of the blockchain industry. For them, a bear market is not a tragedy but an opportunity to accumulate more assets at a lower price.

When to use HODL:

• If you are not ready for active trading and do not want to spend time analyzing charts
• If you believe in the revolutionary potential of cryptocurrencies
• If your investment horizon is 5+ years

Advantage: you avoid emotional decisions caused by FOMO (fear of missing out) and FUD (fear, uncertainty, doubt). Your focus is on the future, not daily fluctuations.

2. Dollar Cost Averaging (DCA) — a method for non-traders

Dollar Cost Averaging (DCA) is a conservative but effective way to accumulate. Instead of investing the entire amount at once (and potentially hitting the peak), you divide the investment into several equal parts and invest them at fixed intervals.

Practical example:

1. Choose assets (for example, BTC and large altcoins)
2. Set a fixed purchase amount ($100, $500 or other)
3. Define a schedule (every Monday, the 1st of the month)
4. Regularly buy regardless of the price

Result: you automatically buy more assets when the price drops and less when it rises. This is a mathematically proven way to reduce the average entry price.

DCA is especially effective in bear markets because you accumulate maximum assets at minimal prices. The main thing is discipline. Do not skip purchases due to fear or interrupt the strategy at the first price increase.

3. Portfolio diversification — don’t put all eggs in one basket

Concentrating all funds in one asset is a path to loss. During bear markets, diversification becomes even more important.

Diversification strategy:

By asset types:

• Bitcoin — “digital gold,” the most stable asset, shows less volatility
• Altcoins — riskier but potentially more profitable
• Stablecoins — pegged to the dollar, used as a “refuge” during panic
• NFTs and tokens — access to specific sectors (GameFi, metaverses, Web3)

By market capitalization:

• Large coins (top 10) — more stable but with less growth
• Mid-cap coins (top 50-100) — a balance between stability and potential
• Small coins — high risk but 10-100x growth potential

By sectors:

• Proof of Work (PoW): Bitcoin, Litecoin
• Layer-1: Ethereum, Solana, Cardano
• Layer-2: Arbitrum, Optimism
• Specialized: AI tokens, DeFi tokens, Web3

Before investing in any project, study:

• White paper — description of the problem and solution
• Tokenomics — token distribution, vesting, inflation
• Price history — look for growth trends, beware of sharp fluctuations (signs of manipulation)

4. Shorting (Short selling)

A bear market allows earning not only from growth but also from decline. Shorting is selling borrowed assets with the aim of buying them back later at a lower price.

How it works:

1. Borrow cryptocurrency (for example, 1 BTC)
2. Immediately sell it at the current price ($88K)
3. Price drops to $70K
4. You buy back 1 BTC at $70K
5. Return the borrowed BTC
6. Profit: $88K - $70K = $18K (minus commissions)

Shorting is a tool for experienced traders. Risks are high because losses can theoretically be unlimited (price can grow infinitely). Beginners are advised to use stop-losses and small leverage.

5. Hedging positions — protection against catastrophe

If you hold a significant amount of BTC but fear further decline, hedging allows you to sleep peacefully.

Hedging mechanics:

• You own 10 BTC
• Open a short position on 10 BTC in futures
• If the price drops by 20%, your loss on the spot position is offset by profit on futures
• The only expense is trading commissions

Result: you are protected from price drops but also won’t profit from rises. It’s insurance, not an investment.

Hedging tools:

• Futures — contracts for future delivery
• Options — the right (but not the obligation) to buy or sell at a certain price

6. Limit orders at low levels — a trap for the bottom

Most traders try to catch the exact bottom of the market and usually miss. Cryptocurrency markets operate 24/7, and sharp drops happen within minutes.

But there is an elegant solution: place multiple limit orders to buy at unexpectedly low levels.

Example:

• Current BTC price: $88,000
• Place buy orders:
  • 100 orders at $70,000
  • 100 orders at $60,000
  • 100 orders at $50,000

If a panic dump occurs and the price drops to $50K, your orders will be executed automatically. You will acquire crypto at the minimum price without sitting in front of the screen.

7. Stop-loss orders — capital preservation

If you invest in altcoins (which are more volatile), stop-loss protects you from catastrophic losses.

How it works:

• You bought a coin at $1
• You set a stop-loss at $0.5 (50% loss)
• If the price falls below $0.5, the order automatically triggers and sells everything
• Maximum loss is limited to a pre-known amount

Psychological effect: stop-losses prevent emotional decisions. When you see red numbers, it’s very easy to panic and sell at the worst moment. Automatic orders solve this problem.

Additional survival rules in a bear market

Invest only what you are willing to lose

The cryptocurrency market is one of the riskiest. Even with the best strategy and analysis, you can lose money. Start with small amounts, learn the trading platform interfaces, gain experience. Do not take loans and do not invest funds necessary for your livelihood.

Constantly learn and analyze

• Read crypto news (CoinDesk, The Block, official project channels)
• Follow technical analysis (charts, support and resistance levels)
• Study fundamental analysis (project development, partnerships, updates)
• Observe the behavior of large players (“whales”) through blockchain analytics
• Follow regulatory news — they influence the market more strongly than technical factors

Conduct thorough due diligence before investing

Before investing money:

• Study the white paper (white paper) of the project
• Check the team and their previous projects
• Analyze token distribution
• Look at price history (are there signs of manipulation?)
• Make sure the project solves a real problem

Store assets securely

Crypto exchanges are convenient but risky (hacking, insolvency). Use:

• Cold wallets (Ledger, Trezor) for long-term storage — private keys are stored offline
• Hot wallets (on exchanges) only for active trading
• Multisignature wallets for large volumes

Set stop-loss and take-profit

Define exit points in advance:

• At what loss are you willing to stop?
• At what profit will you lock in gains?

This prevents emotional decisions and missed trades.

Reassess goals every year

The crypto market develops rapidly. What made sense 2 years ago may be outdated now. Reconsider your investment goals, risk level you are willing to accept, and strategies.

Conclusion: bear markets are opportunities for those who are prepared

Bear cycles are inevitable and are inevitably replaced by bull markets. History shows: those who continued accumulating assets during declines and stuck to their plan received 10-20x profit in the next cycle.

Key to success:

1. Stay calm — panic leads to mistakes
2. Act systematically — DCA, diversification, hedging
3. Protect capital — stop-losses and limit orders are your friends
4. Keep learning — the market changes, and you must change with it
5. Think long-term — the bear market is temporary, and your position can become gold in the next cycle

Adopt these 7 strategies, adapt them to your risk tolerance — and the bear market will become not an enemy but your personal gold mine.