Volatile and sideways markets present an opportunity to implement new strategies.
The current bear market is revealing structural and tactical deficiencies in many crypto institutional investment firms as their portfolio values dwindle; however, it’s not all doom because volatility generates new opportunities to build value. Crypto investment firms could consider the following lessons in order to succeed during bear markets.
1. Trading Through the Noise
Price predictions from news outlets and crypto influencers remain inaccurate, as no one can precisely predict the crypto market. Compared to prior bear markets, today's institutional investors have are more sophisticated. As a result they are able to thoroughly and objectively analyze crypto markets and how crypto markets interact with the broader macro economic environment.
2. Building Opportunities Amidst the Winter
The crypto winter is a small bump leading towards even greater cryptocurrency interconnectedness with the overall economy; in the future, many industries will have integrated crypto. Future-oriented institutions can utilize the current market downturn to build their digital asset infrastructure, crypto products, and services. Below are a few considerations for institutions:
- Bear markets reveal reasonably priced tokens which can be used to strengthen portfolios in preparation for the eventual bull run. Seeking enduring, problem-solving projects with a clear market path beyond short-term profitability can be beneficial.
- Bear markets also provide an opportunity for institutions to dispose of structurally weak assets likely to collapse during a bear market.
- Bear markets can present opportunities for new partnerships, collaborations, and project support.
- Logical decision-making based on proven advantages and disadvantages is critical during bear markets.
- Making pragmatic development choices free from trend-driven noise.
3. Identify Future Opportunities
DeFi was one of the primary drivers of the crypto resurgence following the 2017-2018 bear markets. In the next bull market, a new crypto asset class may lead the way. Institutional investors should regularly monitor changing conditions in the broader economy. For instance, there are reports of an international payment blockchain platform under development to replace the Swift system. The news suggests a new asset class, and potential investment opportunity that would benefit once the model is in place.
Patience Leads to Rewards
Every crypto investment firm must utilize the crypto winter to chart a practical path to successful ventures. Institutional investors must also show their class by standing out through strict investment policies for crypto ventures and staying within the limits set by regulatory organizations.