This year, the perfect storm of geopolitical and economic factors aligned and before we could realize it, a bear market was already settled in. Reputable analysts are now forecasting that the worst is yet to come. The markets are expected to tank their bottom in the coming months. With all this, we hear of various investment strategies and solutions designed to tackle the current situation. But the truth is, most of it is addressing large institutional investors, hedge funds, or individuals operating with 9-figure capital at their disposal.
When it comes to independent venturers, the investment game carries a different inertia. While there definitely are some challenges ahead, bear markets also offer good opportunities. Crypto, NFTs, and Web3 have already proved to the world they don’t always follow the behavior of more traditional assets. Can we find some value for the coming future?
Learn to Recognize the Cycles
Sadly, schooling does not provide proper financial education. For most individuals who ventured into the investment space, it took years, if not decades, to get knowledgeable enough. This is because the markets are running in cycles and it takes a while to understand the long-term behavior. More importantly, it takes a continued effort to understand how you can take advantage.
To have a chance at profiting from the coming months and years, we should look back at past cycles. When doing that, a couple of things stick out as a repeating pattern. Market cycles keep repeating themselves over longer periods. Bear markets are always followed by bull markets and periods of growth. Some examples:
After the 2008 economic crisis, the S&P index embarked on a 10-year-long bull market, topping a 330% increase in 2019. Also, in the wake of the same event, companies like Facebook and Uber were gaining momentum, disrupting the world as we knew it. All while Bitcoin and other digital assets were becoming a reality.
In another instance, the 2020 crash caused by the pandemic was followed by a very quick and vigorous rebound. Both stocks and crypto were touching all-time highs, embarking on a bull market that lasted up until recently. NFTs and Web3 started to gain traction, offering new means for investors to profit.
Looking farther back, the pattern stays consistent. From 1929 up until today, there have been 26 bear markets, some of them lasting months, others several years. But guess what, after each and every one of them, there was a bull market following up. In some cases, the markets rebounded instantly, other times, the progress happened over a longer period of time. Throughout all these cycles, smart investors managed to profit by buying assets in key moments. But if you are only now getting involved in the investment space, it can be hard to have a wide-scope vision.
Crypto, NFTs & Web3 Investment During Bear Markets
While the markets are running in cycles, the investment game has changed since crypto, NFTs and Web3 joined the landscape. Yes, there is bigger volatility with digital assets, but let’s look at the long-term journey for a second. Traversing three bear markets, Bitcoin still climbed 20x (2000%) since 2017, as of today. In comparison, the S&P 500 stock market index gained only around 40% in the last five years.
Another important thing to consider is this: the stock markets have been around for more than a century. Crypto has been around for a little more than a decade, while NFTs and Web3 are only now gaining traction. Currently, only around 4% of the global population is holding crypto assets. When global adoption starts rolling in, crypto will gain even more momentum.
DAOs – An Opportunity for Individual Investors
While any individual can start investing within a DAO (decentralized autonomous organization), this investment method is anything but individual. Since coming to the landscape in 2016, DAOs have offered ingenious, new ways for collective venture. You get to benefit from pooling funds together with members from all over the world, accessing bigger investments. But you also benefit from the collective knowledge, offering you a better mitigation of risk and adversities. Compared to traditional methods, blockchain finance comes with even more unique features, which puts it in a league of its own.
Some DAOs like MakerDAO are rivaling Wall Street hedge funds. With unique DeFi systems, thousands of members are benefiting in the process. Other protocols, like Uniswap, have grown into huge exchanges that are run in a decentralized, democratic way.
Why Are Banks Investing in Crypto & Blockchain?
As crypto and Web3 are disrupting the financial markets, banks decided the obvious move for them is to get involved. Particularly in the last 2 years, some of the biggest traditional financial institutions have joined the revolution from various angles.
UK-based Standard Chartered has recently allocated $380 million across several investments in blockchain technology. Among them – the top ten digital payments company Ripple (XRP). Other giants like CitiBank, BNP Paribas, Morgan Stanley, Goldman Sachs are actively working to integrate crypto projects. All in an attempt to blend the conventional banking system with Web3 and blockchain finance.
This is signaling a wide-scale adoption of digital money. It will become more obvious when the current bear market fades away, but until then, now is not a good time to sleep.
Timing Is Key in Bear Markets
So how are successful investors making money throughout the market cycles? By simply buying low and selling later at a higher price, which is obvious. This is the opportunity that bear markets bring along. If you structure your investment long-term, there are few better opportunities to get in than a bear market.
DAOs are a great environment for beginners and pros alike to invest with ease and performance. With crypto and Web3, you’re not only holding some assets. You are holding a piece of the next big economic boom. Imagine investing in internet companies prior to the dot-com expansion from the 2000s. Or getting involved in the telecom space right before the number of mobile phone users sky-rocketed from around 30% to more than 60% in a number of years. Similar progress in crypto and Web3 is shaping up for the coming years. The best time to get involved could potentially be around this period, when low prices favor strong buy-in positions.
One of the best traits of DAO investment is that you can choose something that you are passionate about and interested in. This way you can invest in something you are already good at, allowing you a better leverage of your knowledge and capital.
What assets are you fancying at the moment? What startups do you want to be backing? Unique.vc platform is a Solana-based dApp for web3 founders and investors. Register and be invited to co-invest in the most promising deals alongside experienced investors.
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