My Exit + Bear Market Strategy

One of the toughest (and most personal) areas of how to navigate crypto markets is when to exit, and how to play the bear market.

I wanted to share my plans, which, I think can be customized to anyone with any level of investment.

Disclaimer: Investing is highly personal, do your own thinking for your unique circumstances.

The bear and bull cycles to date for Crypto have been roughly every 4 years.

Generally, high volatility is par for the course… but protracted bear markets cause despair and sideways action that have you doubting your position, feeling crushed, and thinking crypto is dead.

Basically, you psychologically get Rekt.

There is a lot of debate about whether or not we will continue on a 4-year cycle. Some people believe we have exited that regime.

I personally think this bull/bear will be distinct. I don’t think it will be a “pure 2013 replay).

I think price expectations are easier to predict than the pattern and timing of how we get there.

So my expectation is that it’s something like…

  • The bull market lasts longer than we expect

  • OR There is some type of de-coupling

  • OR Macro forces change the cycle (We saw this in 2020 IMO, and the mini-bear we saw in May of this year).

  • OR we see mini-boom/busts of 50% moves over shorter time periods than 4 years.

Basically, I don’t know.

What this means is that my strategy is about managing my psychology, risk, and ensuring that I have adequate dry powder at the right times to apply more capital to the market at key moments.

Given that my strategy is about managing psychology, and feeling that relative price targets are easier to hit than timing…Here is how I’m thinking.

My plan is to feel mentally and financially prepared for 3 years of a bear market.

The question is: How can I stay invested for the next 3 years, managing my own psychology and risk?

This doesn’t mean fully exiting my position fully.

This doesn’t mean timing the market well.

It means being mentally and financially prepared for being able to ride out whatever comes from now until 2024.

So, my plan is to take out enough capital from the market to feel this way.

Best-case scenario – I use the full dry powder available taken out from the market as my hedge to dollar cost average back into the market or buy major corrections/dips over the course of 3 years.

Worst-case scenario – I use the dry powder to live on or supplement my income without any new purchases for 3 years, but I stay invested.

Likely Scenario – I do some mix of the above, using capital to help support my lifestyle needs over 3 years without needing to exit more of my crypto position, while also dollar-cost averaging or putting in positions during the next 3 years.

This is where your own discretion comes in.

What do you need for that to be true?

The benefit of this strategy is it’s not about being fully out or fully in the market.

It’s about directionally being long while maintaining psychological and financial safety.

I’m curious to hear what you’re thinking about, or if you have anything to share/add etc.

XX I’m David Sherry, I coach early-stage founders, invest in crypto, and write on the overlap of investing, crypto, and the creator economy.

You can join my Telegram chat for more real-time notes on what I’m thinking.