DeFiEducationPRO Exclusive

The Ultimate Crypto Bear Market 2022 Survival Guide

DappRadar
DappRadar
18 May 2022 • Updated 8 Apr 2026 • 34 min read

A complete guide for DappRadar PRO members to understand the crypto bear market and survive a downturn.

This document doesn’t serve as financial advice. Instead, it explains and educates about the options available. None the examples given in this guide should be considered solutions or absolute truths.

There’s no denying that the bear market has arrived as token values and stocks plummet. One could take their losses and pull all capital out, but even that’s not a guarantee to overcome this bear market. This Crypto Bear Market 2022 Survival Guide looks at some options to minimize your losses and risk while still staying active in the crypto market. 

The entire crypto market feels the pain with bitcoin and ether half price from their all-time highs. At DappRadar, we see some sunshine between the dark clouds because the Web3 space has never been more active. The number of unique user wallets interacting with dapps and smart contracts has never been higher. Gaming has a strong hand in those numbers, while DeFi and NFTs remain active markets.

On top of all that activity, wise people on the internet say that the bear market is where true builders will rise. This doesn’t mean that every project launching in a bear market will become a huge success, but it shows determination and conviction. Did you know that DappRadar was built during a bear market in 2018?  

With this Crypto Bear Market 2022 Survival Guide, we hope to help you mitigate your losses. Our tips should not be interpreted as investment advice. Instead, look at this guide as a set of ideas to help you better understand the bear market situation and how to navigate it.

Table of Contents

What is a bear market, and how long does it last?

There is no exact method for determining or identifying a bear market, but market observers generally refer to a decrease of 20% or more as a bear market. Bear markets are often born in a period before an economic downturn, and they primarily indicate that investors are starting to pull back and become more risk-averse. 

Bear markets are typically the result of an overheating of the economy due to inflation and the subsequent political unrest that seeps into markets. Other causes are overextended consumers or some other cause entirely. Such as the impact of the COVID pandemic restrictions on businesses and individuals. 

According to the Schwab Center for Financial Research, the average bear market lasts around 15 months. In contrast, the shortest bear market in history lasted just one month, occurring in 2020 at the start of the COVID pandemic.

What can we learn from previous bear markets?

There are several lessons from the last bear market scenario that started in January 2018—firstly, allocating assets to safer places works. Gold usually performs well during a downturn in traditional markets because it’s a tangible store of value and underpins global markets to some extent. Bitcoin can be considered digital gold and the asset that 99% of tokens follow in the crypto world. The price of BTC doubled over the last bear market period once the recovery began, whereas others continued to slide into the abyss. 

The other cryptocurrency to display this resilience was ETH, and arguably nothing has changed regarding their status since the last bear market. Likewise, Solana and BNB Chain have entered the top 10 by market cap since the last bear market. These two networks have upheld strong performances in the previous 18 months and arguably could become a similar store of value as ETH and BTC over a longer timeframe. Likewise, in 2022 we see several stablecoins in the top ten ranked by market cap. These mostly dollar-backed crypto assets show the evolution of crypto and the rise of DeFi more clearly since 2018. More importantly, stablecoins let investors stay in crypto but walk on the extreme side of caution while earning healthy yields. 

The point is diversification — owning different assets that hopefully perform differently — can smooth out the overall return over time. Moreover, there are two clear facts we have learned from past bear markets. First, bitcoin always recovers and emerges more vital than ever before. Second, patience and having a long-term outlook can pay off.

What does a bear market mean for dapps, DeFi and NFTs?

Dapps are the applications that operate atop the blockchain and are in most cases powered by their native tokens. For example, the leading decentralized exchange on Ethereum Uniswap is a dapp with the UNI token. LooksRare is an NFT marketplace dapp, and its token is called LOOKS. Many people still don’t put that puzzle together, so starting with this is essential. 

When token prices are down, it has different effects on different categories of dapps. But moreover, what we have observed this time around is that dapp usage remains very strong despite falling prices. 

DeFi dapps provide services only really in demand during more buoyant times. However, they still find relevance as users can farm yield, stake, lend and leverage what they hold to keep earning. Additionally, traders will still be active and use exchanges to perform token swaps and even place shorts on tokens they feel will lose most of their value. So activity in DeFi can still be as buoyant as ever, even in a downtrend.

One metric measured in dollars and widely used to measure the success of a DeFi dapp is total value locked. However because the value is locked in cryptocurrency when the token price drops, so will the TVL. The number of tokens could have remained the same, but the dollar value has decreased, and as this is what is mostly reported on in the media, it all looks very negative to the untrained eye. 

New emerging categories like play-to-earn games, collectibles, move-to-earn, and social platforms can thrive in a bear market as token holders not looking to sell their assets look for utility. Play-to-earn games especially offer this utility and can provide people with excellent ways to make low-level income from their crypto holdings. While lower value collectibles based around collecting sets and rare editions can provide people with new hobbies and a way to utilize their crypto. A more recent craze dubbed move-to-earn has also started gaining momentum, turning everyday activities like running or going to the gym into crypto rewards. 

NFTs will be experiencing their first full-blown bear market scenario, so arguably, the jury is still out on what it means for an asset class that’s grown so spectacularly over the last 18 months. First of all, the bear market will undoubtedly separate the wheat from the chaff regarding the sheer amounts of NFT collections on the market, which was already organically happening as we entered Q2 2022. 

The significant blue-chip NFT collections traditionally held and increased their value over time can become a store of value. These need to be monitored closely over the coming weeks and months. At the same time, a reduction in floor prices of blue-chip NFT collections may see demand start to pick up as buyers look for bargains in the top collections. Driving trading volume and then, in turn, price.

How to recognize the fundamental strengths of a dapp during a bear market?

As previously mentioned, dapps are the applications that operate atop the blockchain and are in most cases powered by their native tokens. For example, the leading decentralized exchange on Ethereum Uniswap is a dapp and has a token called UNI. Therefore the performance of a dapp can be pivotal to the performance of a token. Think of it in the same way if Instagram had no users, its stock would be worthless. 

The use of metrics and analytics during a bear market needs to be nuanced, as peaking percentage growth in trading volume and surging numbers of users can indicate several things about dapps. Moreover, they are not always positive metrics despite being colored in green. When analyzing dapps, DappRadar is the leader, so understanding the basics of using data on DappRadar and analyzing metrics in different categories is the first stop. 

Unique active wallets (UAW), or users, indicate the number of wallets connected to a dapp in a specific timeframe. UAW means how many people are using the dapp, but of course, this is nuanced, as one person can have more than one wallet.  DappRadar gives 24-hour, 7, and 30 day data while also providing percentage increases or decreases based on those timeframes. I.e., in the last 7-days, X dapp users increased/decreased X%.

An example of statistics on DappRadar’s Single Dapp Page

Why are wallets connecting?

Wallets connecting to a dapp indicate that the dapp has something the user wants. But, as mentioned, it’s not always so straightforward. A user might just want to withdraw their money. For example, a massive surge in wallets to DeFi dapps Uniswap or Aave could indicate that traders are connecting their wallets to remove funds, or a governance vote is taking place. 

Neither is cause for great excitement regarding investment, so the green percentage surge is irrelevant here. There are also other causes of waves, such as wallets connecting to collect airdrops. Again, these look positive on the metrics, but once the wallets collect, they will leave. The metric doesn’t point to sustained growth; instead, it means an event that needs users to participate. 

On the contrary, users connecting to a dapp frequently show routine interaction and user retention, which in most cases means the dapp is doing something right. For that reason, analyzing over a longer time frame is always recommended to find the dapps with the most positive growth signals.

DeFi dapps

Regarding DeFi dapps, their success and ability to perform can be gauged by what they provide. Platforms like Aave serve lending, staking, and earning products to customers, while Uniswap offers the core functionality of swapping tokens. In a bear market, token swapping may become less attractive as investors HODL after an initial splurge of activity. However, lending may become more attractive for those holding tokens to earn a passive income while waiting for the good times to return. 

In DeFi, it is also essential to understand how protocols quickly rise through the ranks but can diminish or vanish entirely just as fast. It’s vital to spot these metrics in both short and longer time frames. 

As mentioned, Aave is a leading protocol in crypto lending and, as such, is primed to perform well in a bear market. Looking at the number of unique active wallets interacting with the platform over its lifespan, we see consistency over almost two years, with peaks during bear markets. The keyword is consistency. Moreover, Aave provides services popular in both bear and bull markets. 

Looking at CashCow, a dapp that launched on BNB Chain in August 2021, we see an explosion of activity in October, followed by a fast decline. It’s the kind of dapp that initially attracted people but then pulled the plug or the rug. Unfortunately, there are many such dapps. They can usually be identified by ridiculous preliminary interest rates, flawed tokenomics, and a distinct lack of an identifiable team or contract audit. Nonetheless, hungry investors ape in, only to find a Ponzi behind an elaborate body of false information. The bottom line here, if something looks or sounds too good to be true – it is.

These dapps can arise during more depressed times, looking to appeal to greedy or perhaps investors that got burned looking to make some fast profit. They promise a high percentage yield on tokens, but you have to hand them over to their smart contract. Again, if something looks too good to be true, generally, it is. Remember that point about not letting emotion get in the way right back at the start of the guide. It’s essential!

Gamers gonna game

By zooming out and looking at data over a more extended period of time, we can better understand the fundamental strengths of dapps during a bear market. The below screenshot was taken on May 16, a week after cryptocurrency markets went red and a bear market was all but confirmed. 

This list of the top ten dapps across all categories and blockchains is ranked by the number of wallets connected over the last seven days. A metric which, as previously discussed, can be used to show demand for a product or service.

We first see that games are six of the top ten dapps attracting the most user wallets. The dapp game category is arguably more relevant than ever, as falling crypto prices can reduce the barriers to entry to dapp games. Items such as starter packs, avatars, or lands needed to play suddenly become cheaper in dollar value. More importantly, none of these top ten games is new, and all have been operating for more than 12 months.

Zooming in on Splinterlands, we can see that the game has largely been unaffected by the crash in cryptocurrency prices apart from a minor blip. Games are arguably well-positioned to ride the storm, given that users are looking for utility for the tokens they do hold and low-risk ways to employ them.   

Looking at Splinterlands core token SPS’ performance can reveal whether Splinterlands could be a good investment. We already assessed the game as having high demand, a solid development team, and been through bear market scenarios in the past and came out stronger.

SPS has a market capitalization of $40.9 million and an all-time high of $0.91 back in July 2021, an all-time low of $0.05 which occurred on May 14, 2022. At the height of the bull market, SPS performed very well as a game with a solid audience, roadmap, and exciting gameplay advancements coming later in 2022. Arguably, SPS is a good bet for a token that will hold and then appreciate over the long term as it already showed good resilience.     

Another handy function that lets users cancel out some noise is the user filter. Setting this to a minimum of 50,000 will only reveal which dapps have attracted more than 50,000 unique active wallets in the last seven days. These dapps stand the best chance of performing in a bear market. 

While coming from a tangible data angle is a surefire way to back any theories or potential investments with data, there are other less quantifiable ways to gauge the strength of a dapp and its associated token. Arguably, a combination of accurate data and an assessment of the team gives a complete picture from which to base any decisions. Once all is said and done, you are investing in an idea or evolving product, the team tasked with delivering that idea, and how likely it will find demand in the market.

The Team

Looking at the team behind a dapp is crucial in understanding what expertise they have onboard and why they may be well placed to deliver the project. Or not, in some cases. There have been countless cases of founders and project leaders being outed as having a bad history or even being directly involved in scams and rug pulls, only to go on and launch more projects with similar intentions. Luckily crypto Twitter is as active as ever, and in the end, even the biggest secrets tend to surface. 

It’s essential to do as much homework as possible on those at the top of the chain and ensure they are reputable people to deliver a project and not just use it as a get-rich-quick scheme. Here you can look at their past experiences, who they worked for or with, listen to AMA’s and podcasts with the team to better understand who they are, and put a human personality on the dapp. This is a test of judgment, and while some people can smell a rat a mile away, others cannot. However, solid research and simple online searches will reveal all.  

In the blockchain industry, it is also common to see that developers and other team members remain anonymous, instead using made-up names and PFP avatars as their profile pictures. While this may appear daunting, those people are merely adopting Web3 personalities and are, in most cases, very approachable through their chosen networking channels, like Discord or Twitter, for example.

Funding

One aspect to keep in mind is how well the project is funded or how much revenue it can make during a bear market. Crypto lending traditionally soars during a bear market, so firms like Aave are well set up to earn income. On the flip side, yield farming and liquidity provision may not be in such demand when most are HODLING tokens, so platforms like Uniswap may have to ride the storm. However, these two are leaders in their field, so they should already have pretty deep pockets. 

Projects need funding to survive the bear market, pay employees, and uphold the same output and work level. They need financial support to grow and continue communicating with their community at a critical time. In essence, most reputable firms in the blockchain space will see a bear market as an opportunity to build and get ready for the next cycle, while those only interested in short terms gains may go silent. In this instance, silence is not golden and usually indicates trouble brewing. 

Other projects may have been on the cusp of securing funding and may now find a different decision in their amount or whether they receive funding. Those that dont get funded now are almost certain to fail unless they have deep pockets, while projects that secured funding before the crash can now get their heads down and build.

Roadmap and Communications

It’s essential to look at the communications efforts of a project during a bear market. They should still be as lively and active as ever and engage with the community more at a time when they require reassurances. 

Continuing to deliver on roadmap goals is another tangible metric that investors should pay attention to, as during the hype stage, much will have been said about those roadmaps. Now it’s time to see if they will continue delivering. Constant setbacks and missing deadlines can be considered red flags. However, a project delaying the launch of a product or update because maket conditions are not right can be looked at differently. Moreover, it’s about how its communicated.       

During a bear market, overall attention on crypto and blockchain has traditionally diminished.  This bear market will be the most telling for dapps as there has never been so much utility on offer for token holders. Projects that perhaps launched into hype will now be put to the test and its up to investors to keep tabs on them to see who is powering ahead with business as usual, and who has gone quiet.

How to handle your tokens during a bear market?

The first advice is to move your tokens off centralized exchanges into a custodial wallet such as MetaMask or a cold storage ledger. During turbulent times, such as a bear market, exchanges can become insolvent due to a lack of trading activity, liquidity, and planning. This has happened many times, with Mt. Gox, QuadrigaCX, and Cryptopia being the most significant examples. If a centralized exchange folds up, they are under no obligation in most cases to return funds. The old saying ‘Not your keys, not your crypto’ stems from this fact. The bottom line, take complete control of your assets. 

Day trading is dangerous if you don’t know what you’re doing. However, the appeal of buying low and selling high can be just too big a draw for some. Our advice is not to day trade during a bear market as it is a highly stressful and, in most cases, not a profitable endeavor. A recent Business Insider article noted that between 70% and 97% of day traders lose their money. Only experienced traders and exchanges end up in profit.

Lastly, more about how to handle your emotions than the tokens, but of course the tokens are what led to the emotions! Don’t endlessly obsess over all-time highs. However, do pay close attention to yearly lows. This change of perspective should make it clear in your mind that no matter how rough the ride, bitcoin makes considerable progress with time.

What to do with your NFTs during a bear market?

While traders and investors can easily swap their tokens and cryptocurrencies on a centralized or decentralized exchange, a non-fungible token comes with different challenges. Selling an NFT on the open market can only happen peer-to-peer. Being into a bear market could be a good moment to reassess your NFT investments and look at what you have, what you want from it, and what you can expect in the future. 

As an NFT holder, you could:

  • Sell an NFT and move the earnings into low-risk assets. You can simply list your NFT at the floor price or just below it on an NFT marketplace like OpenSea, LooksRare, or Atomic Market.
  • Use an NFT as collateral for a loan. Platforms like Drops and NFTfi allow users to use their NFTs as collateral, allowing them to borrow some crypto tokens. Keep in mind that lending money always costs money. There’s a severe risk of losing your NFT if you can’t pay it back in time. 
  • Liquidate your NFT for associated tokens using NFTX.

However, before you do any of these actions, you must assess your position. NFTs have a different proposition, mainly due to the developing nature of the space and the lack of tangible metrics available to use as a guide. To assess an NFT project now is to look at a few key things. 

These are some of the critical points you need to look into:

  • Why did you buy the NFT in the first place
  • Floor price in crypto and USD
  • Project or community roadmap 
  • NFT Strength 
  • To be blue chip or not

Why did you buy the NFT?

Okay, listen up. It sounds a bit silly, but you have to wonder why you bought the NFT in the first place. Did you like it visually? Do you have a personal connection to it? Perhaps you purchased a PFP with a CC0 commercial license, allowing you to create your brand around it potentially. Or you bought an NFT artwork simply because you love it. There are different reasons to buy an NFT, and you need to know why you bought it and whether you and the NFT can fulfill that original purpose.

Let’s say you bought virtual land in a specific game, but you already know you will never play that particular game. Perhaps you can earn passive income from it, and perhaps you can lend it. But you could also simply sell it and free yourself from the burden. We have to accept that we can’t be part of every community, and a bear market is an excellent moment to reassess your position on your NFT bags.

What’s the floor price doing?

In the NFT space the success of a collection is often measured by the increase or decrease of the floor price. The top-selling NFTs are often outliers, which fail to say something about the entire collection. However, the cheapest ones in a collection say a lot by demand. So when the floor price isn’t dropping, that particular NFT collection holds its value. 

Sure, if you bought a more high-end NFT from a particular collection, you might want to check the Financial Overview of your NFT Portfolio to make sure you’re not losing value. But without a dropping floor price, the fundamentals of that collection are solid. 

Now you can measure the floor price in two ways: in crypto and fiat. While the price of a crypto token drops, it can very well be that the floor price of an NFT collection remains stable. In that case, the market increases the floor price in crypto to compensate for financial losses in dollar value.

This is not something all participants in an NFT collection will do in most cases. Therefore the floor price in dollar value will drop a bit. However, the floor price of an NFT collection can outperform the value of ETH. Simply check the NFT Collection page on DappRadar and see the floor price change over various periods. When ETH drops 30% in USD value but the floor price only 15%, that particular NFT collection can be seen as a hedge. It could potentially be seen as a blue-chip (but more about that later).

Project and Community Roadmap

If you are not emotionally attached to an NFT and don’t think it’s pretty, why are you holding on to it? It could be the rarity of the NFT and its historical significance. But it could also be the roadmap of the projects and their community. Owning an NFT makes you a participant in a community, allowing you to have influence and contribute. 

As a community member, you ought to know about the project’s roadmap. If you don’t, it would be good time to dive into the Discord channel and other social media platforms associated with the project and its community. If there’s a roadmap and a list of plans, and if the people behind the NFT project have lived up to their promises and delivered consistently, you could argue that your NFT investment still has legs. 

However, without constant updates and innovation, an NFT collection is unlikely to weather the storm and could be considered a failing project. In this circumstance, identifying these issues earlier than other holders can help you retain the value of your portfolio by parting ways.

NFT Strength

NFT Strength is a measure introduced by DappRadar to determine the ability of an NFT to survive through the ages. In essence, an NFT is a digital contract that points towards a specific piece of digital data, which could be a game item or piece of artwork. When the digital data is stored on a centralized server, such as a video game, the NFT will lose its value when the game servers shut down. Keeping it on IPFS is already a bit better. But the best NFTs that will survive the test of time are the NFTs that have their metadata and images stored on the blockchain.

CryptoPunks moved its assets onto the blockchain. Autoglyphs are completely on-chain, and ofcourse there are Avastars. The latest 100% on-chain NFT collection is Cyberbrokers. Each of those has a 100% NFT Strength. You can check the NFT Strength of a single NFT on the Single NFT Page. For example, this Avastars NFT #120 has a 100% score. These NFTs will always exist as long as the blockchain exists. How strong is your NFT? If you want to keep it forever, it could be something to keep your eyes on.

Blue chip or not?

Another option for those with vast NFT collections perhaps made up of many lower value items is to clear out entirely and funnel the funds into a bluechip NFT collection such as the Bored Ape Yacht Club and MeeBits or CryptoPunks, for example, if possible. A blue-chip NFT is typically well-known, established, stable, and considered an excellent long-term investment. Blue-chip NFTs are also thought to be a more secure investment than most NFTs and have a proven track record of growth and value. While there are not hundreds of blue-chip NFTs, there are clear leaders in the space.

Nonetheless, we should not focus too much on the term blue-chip. In the stock market, they consider a blue-chip stock one that belongs to a well-established company. These investments seemingly have been secure investments and retain their value firmly. This means that the price hardly moves down. 

Now, the NFT market is still very turbulent. Especially considering that prices are measured in two dimensions: fiat and crypto. The price in crypto can go up while the fiat price goes down. This is possible because the underlying cryptocurrency might lose its value. On top of that, many NFT collections are less than a year old. 

CryptoPunks is often described as the oldest NFT collection on the market, as it launched in 2017. At the same time, Meebits and Bored Apes have only been around since the Spring of 2021. But Doodles, CloneX, Azuki, and Moonbirds hit the market in the past 12 months, and therefore there’s no reason to label them as blue-chip NFT collections. 

This doesn’t mean that these aren’t exciting investment opportunities. Through DappRadar we can see that the floor price of a Bored Ape Yacht Club NFT has dropped 6.95% over the past 30 days to $204,100. However, ether (ETH) lost 33.7% over the same period, making BAYC a good hedge against the dropping prices. These are some of the other collections that have outperformed against ETH in the past 30 days at the time of writing: 

  • Clone X – $26,150 (-16.82%)
  • Mutant Ape Yacht Club – $42,250 (-2.36%)
  • Art Blocks – $4,070 (+14.04%) 
  • PROOF Collective – $180,480 (+72.26%)
  • Cyber Kongz – $54,130 (+328.35%)
  • CyberBrokers – $6,330 (+9.06%)
  • Azuki – $27,640 (+6.95%)

We often consider CryptoPunks a blue-chip NFT collection because of their historical significance, but in this instance, the Punks lost 39.6% on their floor price value. This means that CryptoPunks performed even worse than ETH during the same period. Does this mean CryptoPunks is not a blue-chip collection? Is this an opportunity? We can’t say, but CryptoPunks used to serve as a buoy, which is a role it has lost.  

It’s well documented that the NFT space expanded at a lightning pace. However, during these bear market days, it’s widely seen that the sector matures, as solid projects show grit and any ‘get rich quick’ collections fall to the bottom of the pile.

Using the DappRadar NFT Collections page you will be able to recognize some of the more established and actively traded NFT brands on the market. For example, look at trading volume over the past 30 days. How strong have sales been in comparison with the all-time trading volume? You might see a serious decrease in floor price. What has happened, and has this become an opportunity?

What are the best DeFi practices during a bear market?

The first thing is to stay ahead of your emotions and manage decisions with care. Detaching yourself emotionally from the decision-making and having a long-term view can help. Whatever money is potentially gone is gone, no matter how much whinging and complaining, you’re in the market’s hands now. Of course, it’s easier said than done, but a vital part of any successful investing strategy is staying calm and thinking objectively. Once you have mastered the way of the samurai and are ready to approach your portfolio with a more realistic standpoint, then the work begins.

What’s in your DeFi portfolio?

A bear market can provide an excellent opportunity to go through your portfolio with a fine-tooth comb and sell tokens from projects with doubtful fundamentals. Of course, everyone is a little guilty of apeing in, so now at a time when those assets are under severe stress its important to look harder and decide if this asset will appreciate back to a point where you can recover funds or better still, recycle back to its all-time high and beyond. You can use the DappRadar Portfolio tracker to do this. 

Regarding fundamentals, the metrics to look at are market capitalization, user base, and popularity. The user base can be assessed by looking at the number of unique active wallets interacting with a dapp on a specific network and the trading volume. Popularity can be assessed using social signals, and platforms like Santiment, but moreover, a high level of market cap implies popularity to some degree. However, crypto is often judged as having very few fundamentals. By that, most people mean that crypto is unlike stocks, properties, and commodities: There are no underlying assets to back crypto. 

BTC continues to lead the pack of cryptocurrencies in market capitalization, user base, and popularity. ETH is second, with around half the market cap of BTC. Therefore using these two coins as benchmarks can help identify prospects. When we say an example, think outside the box as well. What these two do is so spectacular that they have led the industry for over a decade. More importantly, who else is shaping up for similar success in the space? Using the below methodology, you can analyze what aspects make a project successful.

History can repeat

Through using the historical ranks of cryptocurrencies by market capitalization, a metric that indicates the total market value of a cryptocurrency’s circulating supply. We can look back at the last bear market cycle starting in January 2018 and see which tokens made it through to the other side with positive gains and which seemingly didn’t have what it takes. The below compares January 2018 all-time lows with the asset’s price at writing. 

BTC – 16477 to 32589

XRP – 3.38 to 0.53

ETH – 1153 to 2400

BCH – 2786 to 244

ADA – 1.01 to 0.67

NEM – 1.84 to 0.07

LTC – 288 to 85.99

TRX – 0.1997 to 0.07

XLM – 0.69 to 0.15

IOTA – 4.07 to 0.43

The only cryptocurrencies that made it through the other side and ended up increasing over the longer term were BTC and ETH, both roughly doubled in value. At the same time, the rest lost incredible amounts of money, with tokens like iota losing almost 90% of their value over four and a half years. Arguably those projects were tipped for important things, in perhaps the same way some projects have found recent success amidst the recent metaverse and NFT hype but won’t make it. Arguably, BTC and ETH still dominate the landscape, so flipping your holdings to these two could prove a far safer position. 

Even more interesting is that the list of the top ten cryptocurrencies by market cap at writing is almost entirely different. XRP is hanging in there while BTC and ETH continue to dominate. Also, there are now four stablecoins on the list, showing how important they became to traders as there were none on the list in 2018. Additionally, Solana and BNB hadn’t even launched back in 2018. We predict that apart from key stablecoins, BTC and ETH, the list will look entirely different again in 2026. It’s essential to monitor trends and remember to follow smart money.

Data Captured on 10.05.22 @ 12.30 EST

DeFi was a significant focus of the industry for many years, but the last 18 months were dominated by gaming, NFTs, and metaverse projects. Arguably a different kind of blockchain infrastructure is required to handle and scale these types of projects as shown by the crippling of the Ethereum network as transactions peak and gas fees rise to all-time high levels. Alternative solutions like Polygon, BNB Chain, and Solana found a lot of traction amidst a scenario of more investors arriving and demanding low fees and fast transactions. 

We don’t envisage this to change, so two questions to ask when looking at investment for the future are: is the project doing something that will serve demand and align with trends, and is the team and project well funded and prepared to ride the bear market. Metaverse, gaming, and NFT trends cannot be ignored or passed off as a fad, so looking at what protocols and networks will facilitate their scalability is an option. 

Stablecoins

Another method to store value and earn passive rewards in a bear market is to swap to a stablecoin instead of your bank account. A stablecoin is a cryptocurrency that attempts to offer price stability and most are backed by a reserve asset. In this case, the most popular asset is the US dollar, and the euro and British pound back other examples. 

Stablecoins are algorithmically pegged to the underlying asset’s price, giving traders an alternative to cashing out into a bank account. Day traders use stablecoins to move in and out of trading positions as the fees involved are less than constantly going from fiat to crypto and vice versa. 

Another benefit of holding stablecoins is the plethora of staking yields available that can often be as high as 6%. One example of leveraging this offer could be to swap crypto with weak fundamentals that you perhaps bought on a whim into a stablecoin and stake it. It gives you a piece of mind that no matter what the markets do, you are retaining the dollar value and increasing it steadily. Another way would be to add liquidity to a two-sided stablecoin pool to earn a yield on platforms like Curve. 

Moving fiat into crypto can take time and, in some cases, need to process, which can take up to 24 hours. By this time, any identified opportunities may have slipped away. Holding stablecoins in your wallet or on an exchange allows you to strike quickly if an opportunity arises. The top three stablecoins by market capitalization at writing are USDT, USDC, and BUSD. 

Lending is another way to leverage your portfolio through platforms like Aave, which lets you lend out crypto assets in return for a yield. There are two main reasons for investors to consider crypto-related lending. First, investors can put up their cryptocurrency holdings as collateral to take out a cash loan. This way, investors can release liquidity without completely cashing out their holdings. The other reason for collateralizing crypto assets is for short selling. 

Short sellers collateralize their cryptocurrencies to effectively place a bet that the price of a crypto asset will fall. When the open short position is closed, the investor who placed the bet will receive either cash or an additional sum of cryptocurrency, depending on how the contract is formulated. On the flip side, if the price increases while a short position is open, a portion of the collateral will be lost. 

Overall, managing a DeFi portfolio during a bear market is all about mitigating risk and getting the assets you have working for you in the most intelligent way. It is also about identifying which assets hold the lowest perceived risk and may carry your portfolio through to brighter days.

Closing words

A bear market is a harsh time for those who invested at the top of the hype cycle, but the cryptocurrency market has been around for more than a decade. Even though the past is not a guarantee for the future, blockchain technology and its adoption spreads rapidly around the globe as institutions, commercial enterprises, artists, celebrities and Web3 entrepreneurs jump in. At DappRadar we believe in a future where various blockchain ecosystems help users to monetize their online activity, while maintaining full ownership over their identity. 

As users of Web3 technologies you’re always presented with new opportunities and even newer tools. We hope that this document will have helped you to gain some insights into how to handle your digital assets during a bear market. Keep in mind that none of the content in this article is meant as investment advice, but solely as educational material to help you understand the market and your options.

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Bear MarketCryptocurrencyDeFiFeaturedGuideNFTsPRO ContentStablecoins

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