What Does It Take To Stay Mentally Healthy During Crypto Bear Markets?

It takes a strong mind to trade digital currencies and even a stronger one during bear markets. This article provides some crucial information on ensuring your best mental state during challenging periods when you’re more likely to lose money than to make a revenue. 

The unfavorable conditions of the present crypto market have made it a matter of concern for most investors (beginners and seasoned), and many consider the option of giving up trading digital currencies. The general fear that dominates the sector and the psychological effects of losing money affect traders’ mental health in various ways. And, understandably, people felt low when Bitcoin price dropped from its all times high to its present value. 

Let’s find out more about the crypto winter, its effects on investors’ mental health, and the ways in which they can stay mentally healthy. 

What is a bear market?

A bear market is a period marked by falling prices for all assets. During this time, the market sentiment is negative for extended durations, and fear and panic replace the optimism that usually surrounds the sector. 

We’ll get back to Bitcoin, as we mentioned earlier. Its price started to drop from its all-time high in October 2021, and its value decreased by over 70% by November 2022. The global cryptocurrency market also dropped from $2.9 trillion to around $800 million at present. 

However, seasoned investors know that this isn’t the first time the market has gone through a bear phase; other significant ones happened in 2014, 2015, and 2018. 

How do bear markets affect investors’ mental health?

If you’ve added digital currencies to your investment portfolio before the bear market, now you’re probably dealing with some deep losses. You cannot feel comfortable losing money, especially if you plan to use it for other purposes in the long run. The continuous price drop has triggered a general sentiment of fear in the market, and you’re no exception to it. You might invest more time in studying the market before placing a trade, and you always consult the charts for opportunities because you’re looking for ways to make up for the lost funds. 

Mental health specialists state that people tend to develop compulsive trading behaviours when dealing with losses because they panic and leave their emotions to control their actions. Most investors forget that not all trading counts, and sometimes it’s best to wait and research the market to ensure you understand your strategies. Don’t get too attached to the charts because digital trading currencies without relying on a plan can turn into an addiction that engages your emotions solely. 

The longer you spend in the face of your screen trying to figure out where the market is heading, the more prone you are to anxiety, fatigue, and stress. Additionally, making little profit or continuing to lose trades that only make you lose more money could trigger depressing thoughts, which could impact your overall mental health and productivity. 

Ways to maintain your mental health during the bear markets

If you’re trading cryptocurrencies as a side hustle or a full-time job, you’re most likely used to reading candlesticks and charts daily. Some would say that you even obsess about the market and sometimes have the impression the candlesticks grow in your favour. But trading in a bear market comes with several challenges, and it’s crucial to prioritise your mental health. 

1. Establish trading hours

We understand it, you’re passionate about it, or you’re trying to make up for the lost money, but you cannot stare at charts all day long because you’re not a robot, and you’ll get exhausted. Treat crypto trading as you’ll do with any other job or business, and set a schedule for when you engage in the process. Suppose 9 to 5 works well for you; pick this time schedule and stick to it no matter how good or bad your trading days are. Regardless of what’s happening in the sector, don’t alter your trading hours. Ignoring this disciplinary trading method is easy, but it will impact your mental health in the long run. And discipline is what sets the line between professional and amateur investors. 

2. Stick to a plan

We must emphasise more how important mental discipline is when trading digital assets. Do your homework when you come upon an interesting project and try to figure out if it fits your goals. Take notes to establish what the risk/reward profile is and how much you can risk losing. 

Don’t just stare at the charts hoping they will go up or down, but plan your trades in advance and create entry and exit points. Don’t place your trades in the hands of the crypto trading Gods, but stick to your plans from start to end. 

3. Manage your fear and greed

Professional traders think greed, fear, and hubris are the biggest enemies when investing in cryptocurrencies, especially in a bear market. It’s vital to keep the emotions neutral and switch the focus to the framework of the process, methodology, and cold logic. Don’t let your wins make you feel too good, and your losses feel too bad. Yes, it’s easier said than done, but this is the best way to prevent this hustle from affecting your mental health. 

4. Take a break from the sector

It’s best to take a break from the market when you feel like you’re losing control over your thoughts and behaviours. It’s normal for unfavourable market conditions to have a negative impact on your emotions, but ensure they don’t take control over your entire well-being. Take a step back and engage in activities that clear your mind. 

This is the ideal opportunity to improve your skills, concentrate on other activities or spend more time with your family and friends. During this break, turn off all notifications from the apps and magazines that keep you updated with the state of the market. 

How long will the bear market last?

The average bear market lasts around two years, so strengthen your mental health because you’re here for the long run.