Tips for Investing in a Bear Market | Bankless Africa Newsletter
This is the Bankless Africa Newsletter, your one-stop plug for well-curated and up-to-date crypto and web3 news around Africa.
Hey, Happy New Year!
Yeah, we know it's the second month of the year, but it’s the first time you’re hearing from us this year, right? So, we’re good to wish you a happy new year.
January brought the green candles and there has been that rush of energy and excitement in the market. While some are still wondering if this is all a bull trap, some smart degens have continued to maximize the upward trends.
How about you? Do you think the bulls have finally awoken from their deep slumber? Or are your thoughts filled with fear, uncertainty and doubt? Do you think bitcoin will sustain its current pump? Or does it all seem like a bear market rally?
Whatever your thoughts are, we’ve got some good news!
In this issue, we’ll be:
Introducing you to a new investment strategy
Sharing the latest news in the market
Revealing some educational pieces, and of course
Showing you how to get BANK tokens for FREE
So, stick around, enjoy the new year, and of course, enjoy this issue!
Drum rolls pleaseee………🥁
We are introducing a new session — Trivia. Provide answers to questions and stand a chance to win a gift from Bankless Africa.
Our first Trivia question will come with the next issue. You sure don’t want to miss out! So, be on the lookout for our next newsletter issue.
🏴 Bankless Africa Podcast
In this week’s podcast updates, we bring you news of Luno’s partnership with PayU; to allow users instantly purchase crypto using their debit or credit cards.
We also discuss how Fast an AI and blockchain startup in Kenya, just got a boost with investments from Swiss blockchain venture capital firm, CVVC.
Furthermore, we provide insights into Pezesha, a fintech company in Kenya providing financial services to MSMEs, which has just obtained its license to operate in Uganda. And let's not forget Lagos, which has been placed ahead of the pack in Africa as one of the top 50 global cryptocurrency hubs.
Listen to the episode to get the full gist of all the happenings in web3 Africa! Also, do well to share your thoughts on our socials.
📢 Bankless Africa x Web3Accra
Mark your calendar folks! The Bankless Africa media team will be live at the upcoming web3Accra summit as a media partner. This 2-day event scheduled to hold from the 23rd to the 24th of February 2023 features incredible builders and founders of African web3 projects like Afropolitan, Artshelp, Ziliqua, and Melanin gamers. It focuses on highlighting/showcasing the latest web3 trends and developments across crypto, metaverse, NFTs, and blockchain within Africa.
Should You Dollar-cost Average in a Bear Market?
If this is your first time experiencing a bear market as a crypto HODLer, the past few months were probably filled with several mind battles and conflicting thoughts. Perhaps you’ve been wondering "Is crypto dead?", "Will I ever make a profit from crypto?", "Maybe I should just swap all my funds to stablecoins". The mind conflict may have even been amplified, thanks to the myriad of self-proclaimed crypto analysts littered on the internet.
Even if it’s not your first time, you were probably not free of these worries due to your financial investments (some coin values almost fell to zero!). Nevertheless, we know that the bear market is only a season that will pass. Besides, the bear market can be a blessing in disguise if you know how to maximize the market condition by flipping it in your favor. How do you do that? One way is to dollar-cost average (DCA) into crypto projects that you believe have a good future potential.
Dollar-cost averaging is a strategy that many financial experts have sworn by, including renowned investment experts like Warren Buffet. It involves investing a set amount of money over a particular period at regular intervals; could be daily, weekly, biweekly, or monthly. For instance, if you intend to invest $500 into bitcoin, instead of investing all $500 at once, you could invest $5 daily for the next 100 days.
Why You Should DCA in a Bear Market
You should DCA in a bear market, especially if you are a beginner. Let’s look into some reasons why dollar-cost averaging is the wise thing to do.
If you are an investor and not a trader, then you should DCA when investing in assets in a bear market. That way, you’ll be buying at a discount. A trader chases temporary price fluctuations, but an investor is interested in the long-term growth of an asset. So, practice using DCA when you want to accrue large amounts of a particular asset at a price cheaper than the average value.
Buying All the Way Down
Perhaps you’re looking to invest some money into BTC but you’re waiting to enter the market when BTC hits $10k. What if BTC never hits $10k but instead enters a bullish run from $15k?
No one can accurately tell when the market bottom will set in, we can only predict. That is why you should DCA in a bear market. That way, you’ll be buying all the way down at a discount as the price tanks.
Cutting Out Emotions
One of the biggest advantages of DCA is that it takes emotions out of investing. When you’re disciplined with your DCA plan, you’ll be investing automatically, saving you from the possibility of making rash moves based on temporary price actions.
When You Should Not DCA
We've just mentioned some of the top reasons to DCA. Are there any reasons not to? Yes, there are.
First, you should not DCA into a crypto project that you don’t believe has potential for the future. Not all cryptocurrencies will make it out of the crypto winter; dollar-cost averaging into an unsustainable project will therefore do more harm than good to your portfolio. Hence, you should only DCA into solid crypto projects that you have done adequate research on and are convinced of their future.
Also, you shouldn’t DCA in a bull market. Dollar-cost averaging is aimed at averaging your total investment costs. However, it is not profitable when the market continues to make new highs. So, you should steer clear of dollar-cost averaging in a bull market.
If you are interested in buying crypto with a DCA strategy in this bear market, an excellent platform to use is UseAccrue. The app enables you to set periodic buys for a particular Crypto asset. You also get to pause or stop your purchase anytime you deem fit.
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Disclaimer: This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.If you’d like to be featured in the Bankless Africa Newsletter, Reach out to us via Discord or Telegram