Rising is revolution, falling is fraud—emotional judgments of bull and bear markets will only harm you
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Rising is revolution, falling is fraud—emotional judgments of bull and bear markets will only harm you
Winning public acceptance of cryptocurrency is the key.
Navigating Web3 tides with focused insightsAuthor: Jason Choi
Translated by: TechFlow
The following discusses tactical responses to a potential bear market.
First, most ordinary crypto investors view bull and bear markets in a binary way.
Unlike traditional financial markets, where "bear markets" have strict definitions, there is no consensus among retail investors about what constitutes a bull or bear market in crypto!
For example, if the market drops 50% but recovers within a month, is that a bear market?
Or, if the market gradually declines 30% over six months with almost no relief, is that a bear market?
Or, if only Bitcoin rises over six months while everything else falls, is that a bull or bear market?
The main reasons for this lack of precision are:
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We're all emotional beings.
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Crypto's extreme volatility. Due to sheer magnitude, most traditional definitions of "bull and bear cycles" can play out within a single week.
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Misunderstanding of timeframes. With shortened liquidity timelines—such as quasi-equity in high-risk, early-stage projects trading publicly during seed rounds—the situation becomes even more chaotic.
In short, you're operating in an environment where founders think in decade-long horizons, VCs invest on three-year cycles, traders operate on one-month timeframes, and scammers execute pump-and-dumps within four hours.
Are you still wondering why people feel confused?
However, binary thinking isn't why most investors fail. The real problem lies in failing to reconcile these conflicting perspectives across different timeframes.
For instance, holding the belief "I'm bullish on crypto" and using it as justification for leveraged long positions is exactly why most speculative bulls from the last supercycle got wiped out.
Similarly, believing "meme coins are overvalued" and shorting every major meme coin last year was also a losing strategy.
Likewise, thinking "AI + crypto is the future" and investing in every multi-billion dollar AI crypto project without shipped products—and with four-year lockups—is why we'll see poor distributed profit index (DPI) outcomes.
All these views might be directionally correct over several years—but what good is being right if you lose everything betting on them within weeks?
The core issue is that crypto itself may indeed be a long-term macro trend, but the market already knows this—and has priced it in.
Market confidence in this supposed knowledge depends heavily on which phase of the cycle we’re in. That’s why investors must understand our current stage. While precise price prediction is impossible, probabilistically identifying our likely market state is key to achieving alpha.
The challenge lies in detecting shifts in these market states—the turning points from bear to bull, and bull to bear, which often only become clear in hindsight.
Mature investors keep this in mind and act probabilistically, constantly re-evaluating their views based on new daily information, since the future depends largely on these new inputs.
“Wait—if not ‘bull market = buy, bear market = sell,’ then what should we actually do?”
CT (Crypto Twitter) isn’t the place for nuanced analysis, so I hope these tactical and theoretical examples help clarify my point.
Simplistic approach:
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I think a bear market is coming.
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Sell everything, go short, tweet bearish takes every day.
Ordinary approach:
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I think a bear market is approaching, but I’m long-term bullish on crypto.
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Sell the weakest positions, free up cash to redeploy when prices drop.
Mature approach:
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I have strong reason to believe we’re more likely than not entering a bear market in the next 6–12 months, and the value-at-risk (VaR) under this scenario exceeds my tolerance.
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However, within a 1-month horizon, there are credible catalysts that could prove me wrong and drive a significant rally.
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Long-term (5+ years), I remain extremely bullish on crypto.
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Reduce most spot holdings to raise cash, buy 1-month call options to hedge portfolio delta, tighten risk parameters and shorten trade durations, and deploy 5-year growth strategies opportunistically during periods of excessive downside.
And so on.
These examples are simplified, but hopefully illustrate how probabilistic thinking translates into actionable strategies.
I’ve personally observed how different risk management styles perform differently across markets. For example, cautious investors ("bears") may outperform optimistic ones ("bulls") during bull markets. Likewise, optimistic investors ("bulls") may survive longer than pessimistic ones ("bears") during bear markets.
Finally, remember that all such market discussions are trivial compared to the meta-game:
Winning public adoption for crypto is what truly matters.
Without that foundation, whether it’s bull or bear is irrelevant.
Because otherwise, there’s no game to play at all.
Have fun, and good luck.
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