To state the obvious: we are currently in a bear market. Bitcoin prices have dropped dramatically since its peak price of $69,000 in November 2021 and we are seeing all the usual characteristics of a bear market such as:
- Decreasing prices over a sustained period of time;
- Supply is greater than demand;
- Lack of investor confidence in the market;
- No talk of cryptocurrency in mainstream media;
- General distrust in cryptocurrency among economists, analysts and traditional finance;
- Lower highs in the event of good news;
- Lower lows in the event of bad news.
However just like we’ve seen time and time again, the cycle continues and Bitcoin will once again rise. Until then though, it’s extremely important that you’re securing your cryptocurrency.
BUT FIRST, WHAT IS A BEAR MARKET?
A bear market is a prolonged period of falling prices by 20% or more from recent highs, although this figure is not set in stone and can vary depending on market conditions. A bear market in crypto can be caused by a number of factors, such as:
- Excessive speculation and investor exuberance: When investors get too excited about a particular asset, they tend to push prices too high, too fast, which can create an unsustainable bubble that eventually pops, leading to a market correction.
- FOMO (fear of missing out): When investors see prices rising quickly, they may jump into the market without proper research, creating a self-fulfilling prophecy where prices continue increasing simply because more people are buying. This usually starts a trend in which the same investors sell off their assets once they’ve made what they consider a considerable profit, which then creates a trend and pushes the prices down again
- Exchanges getting hacked: If a major exchange gets hacked and loses a significant amount of investors' money, it can trigger a marketwide sell-off and correction.
- Regulatory uncertainty: Any time there is regulatory uncertainty surrounding cryptocurrency, it can lead to a sell-off and corrections. For example, prices fell sharply when China announced it was cracking down on cryptocurrency in 2017.
WHY IS IT IMPORTANT TO SECURE YOUR CRYPTO IN A BEAR MARKET?
Leaving your crypto on a third-party service such as an exchange, especially during a bear market, is extremely dangerous! You don’t own your private keys and are essentially given an “IOU” from the platform to store your coins with them. If the exchange goes bankrupt (which often happens when the market drops) there is a high chance the platform will not be able to afford to give every single person that trades with them their assets back.
What happens to all of the cryptocurrencies you’ve been securing on their exchange? Well, it disappears along with them!
We’ve already seen this play out in the current bear market. Some of the world's largest cryptocurrency exchanges & platforms, such as Celsius Network and Binance, recently halted customer withdrawals. Users were left in the dark over what was happening with the cryptocurrency they held on these exchanges, and if all would be lost.
SO HOW CAN YOU ENSURE YOU ARE SECURING YOUR CRYPTOCURRENCY DURING A BEAR MARKET?
By storing them on a cold storage hardware wallet. Cold storage hardware wallets allow you to move your assets offline AND keep ownership of your private key. Your private keys are generated and stored on the hardware wallet which is then protected by a PIN and an optional passphrase. The keys are never exposed to the internet so they can’t be stolen or copied. That’s why it’s known as cold storage. You and only you are in ownership of your assets.
Here at Coinstop, we want to help you secure your cryptocurrency. That’s why we stock the very best in digital security. From hardware wallets to recovery seed phrase storage devices, our products will help you to become your own bank. Cryptocurrency is the future, and it’s time to start securing yours!