Gaining An Advantage
When projects are heavily discounted in a bear market it is often tempting to choose the most battered coins and tokens. The reasoning here is that a return to previous highs will ultimately increase your profit margin. This can sometimes work out but is definitely not the rule. Ideally, you want to be capturing value and not merely securing a discount. Gaining an amazing discount on a coin that will later perform below par doesn’t really serve the interest of an investor. However, a decent discount on a project that will go on to create new highs and generate additional income is a far superior option. “Value investing” applies this logic in that the project or company needs to hold value and future potential due to a number of various reasons. There might well be a reason that a certain project is so heavily “discounted”. For instance, it may not even be discounted but rather traded at fair market value due to failure or abandonment by the team.
Just as a “high tide lifts all boats”, a bear market drags everything down with it. This is when investors are faced with an amazing opportunity. In the case of legitimate projects, a severely discounted price is a scenario where investors can capture value. Be careful of buying “junk” just because it is “so cheap”! In cases like this, I might allocate a very small allocation, if there is some underlying factor that could fuel a “comeback”. However, I choose to focus on solid projects that are already established or show significant promise. This is where projects such as HIVE and other income-generating projects begin to look extremely good! Solid DeFi plays can also become heavily discounted in a bear market and subsequently rather attractive to the “altcoin hunter”.
Value Is Not Only Price
Price can obviously make an asset more affordable, which removes barriers to entry for smaller investors. As the saying goes, “Price is what you pay. Value is what you get.” As mentioned, an asset can be “cheap” but that does not necessarily imply that it holds value. A valuable asset does not merely appreciate in value over time, but also generates additional value. This is the time to begin seeking out coins and tokens that have unique or attractive income-generating aspects to them. This is the essence of “capturing value”, being able to accumulate assets at ridiculous prices, and then being able to leverage future price appreciation synergetically with income-generating properties. This is when buying DeFi assets such as CUB, CAKE, and others can be extremely profitable in the long run.
For many investors, prices are already favorable. There is however the likelihood that discounts could even increase further in the following months. However, each person has their own unique “acceptable” entry point. Ensure that you do significant research before making any moves. This is also not financial advice but rather how I interpret particular market dynamics. Enjoy the show, things will begin hotting up eventually!