It’s not easy to maintain courage as the prices of crypto assets begin to run down. However, you shouldn’t bury your head in the sand when you can follow these simple steps and make the most of this bear market opportunity.

With bitcoin (BTC) dipping below $30,000 briefly on May 9, 2022 for the first time since July, 2021, the crypto market is experiencing double-digit percentage losses. General market sentiment and commotion shaking the TerraUSD (UST) stablecoin and LUNA have many investors understandably nervous. But that doesn't mean you should give up on the trade and run from the markets.
Therefore, the question goes like this: “what should you do in this kind of situation?”

What you should do instead is what I have analyzed in this article so you should apply them and succeed as a cryptocurrency trader.
1. Use the dollar-cost averaging to buy the crypto dip

It’s all too easy to be on the wrong side of a crypto trade when markets turn extensively volatile, but that doesn’t mean you have to sit there and watch your portfolio crash down by the hour.

Investors who have held back a reserve of fiat currency or stablecoins, or have consumable capital in their bank accounts, will have the capacity to “purchase the dip.” You need to practice the act of buying an amount of cryptocurrency whenever there’s a considerable bearish correction in the market.

The idea is, if prices go back to their previous highs, the dip buyers will bank a nice profit. This reminds me of the recognized lectures of stock trading legend Warren Buffett, who once said “When there’s blood on the streets, you buy.”

While buying the dip can be done in a single trade, the most recommended strategy is to implement something called “dollar-cost averaging (DCA)”. This involves making several trades over time after breaking up your reserve funds into smaller tranches.

For example, let’s say you have $1,000 in reserve funds. A good DCA strategy would be to split up the amount into five parts of $200 or even 10 parts of $100 and place trades using those lesser amounts.

The thought behind this is, it’s incredibly difficult to know exactly when an asset has bottomed out (reached the lowest price before reversing), so instead of spending all your money in one go, it usually works out better to buy a small amount and wait to see if the asset falls in price further. If it does, buy a little more, and so on.

Doing this will usually bring in much better results than if you had invested all your capital in a single trade – unless, of course, you were lucky enough to go all-in just at the right time.

2. Use indicators to find the best entry point

For investors that have a fundamental or advanced understanding of technical analysis – the practice of predicting an asset’s price movements based on chart trends, indicators, and patterns – it’s possible to use certain indicators to analyze when an asset has reached a bottom.

Of course, no indicator is completely foolproof, but they can often give you a strong signal when to buy a dip).
Relative Strength Index (RSI is the technique to use. It is a momentum oscillator characterized by a channel and a line that oscillates in and out of it. There are two key elements to this tool: the overbought and oversold.

• Overbought

When the indicator line breaks out above the channel, the asset in question is considered “overbought” – in other words, overvalued – and usually signals that prices will fall back down soon.

• Oversold

When the indicator line breaks out beneath the channel, the asset in question is considered “oversold,” or undervalued, and usually signals that prices will rise soon.

Although these two signals can be used alone to achieve a good result, they don’t always accurately predict bottoms or tops, particularly on lower time frames such as the four-hour, hourly, or 30-minute options. A better method is to employ the RSI divergence strategy.
One thing to note about the RSI is that it typically follows a similar pattern to an asset’s price, meaning when the price falls, the RSI indicator line also falls. However, there are times when the two lines move in opposite directions. This is known as an RSI divergence, and typically indicates the beginning of a trend reversal.

To indicate a bottom, you will have to perceive if the RSI line makes a higher high while the corresponding price makes a lower low. Perfectly, the RSI line will be near or into the oversold region on a larger time frame, such as the daily, to signal a strong reversal opportunity.

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