Yida Gao, Shima Capital Talk Bear Markets

Most people involved in cryptocurrency and Web3 investments know there is a current bear market in the industry. Yida Gao of Shima Capital has dealt with a bear market since launching the company in 2021, but they’ve found plenty of success.

While many are skeptical about working with a bear market, Yida Gao believes there is still plenty of opportunity for those who know how to handle it properly. 

Having a better understanding of a bear market and feeling confident despite the fact that the negativity surrounding it can be a significant first step toward success.

What is a Bear Market?

A bear market is defined as a decline of 20% or more in the value of a broad stock market index, such as the S&P 500, over at least two months. Bear markets are typically associated with widespread pessimism and investor fear.

In cryptocurrency, most look at the major players like Bitcoin and Ethereum to determine a bear market. If they see a decline of 20% or more, most of the other cryptos follow.

Yida Gao and his team at Shima Capital have built a venture capital firm focusing on investing in bear markets. 

What Causes Bear Markets?

There is no single cause for bear markets. They can be triggered by various factors, including economic recessions, high inflation, interest rate hikes, political turmoil, and natural disasters.

Every investor has a theory about why there is a current bear market with Web3 companies. It’s not something that happens overnight. Recovery takes time, and there will be some indicators along the way before officially getting out of a bear market.

What are the Pros and Cons of Investing in a Bear Market?

There are both pros and cons to investing in a bear market. On the plus side, investors who are willing to take on more risk can potentially reap higher rewards. 

Having those significant opportunities is nice when everyone else is playing scared. Some wildly successful investors in different markets have started by being aggressive during a bear market.

On the downside, however, bear markets can be very volatile and unpredictable, so investors could also experience substantial losses. Without being informative and selective when investing in a bear market, there’s a chance to lose money in a hurry. 

Yida Gao has plenty of optimism, but even he knows that plenty of companies simply won’t make it because they aren’t set up for any type of long-term success. Lucrative options exist, but deadweight and scam-like companies also kill success rates.

How Yida Gao and Shima Capital Have Had Success in a Bear Market

Most know about the current bear market when in the cryptocurrency market. While it may be tempting to give up and cash out, there are still ways to find success during this time. Yida Gao and his team at Shima Capital suggest a few tips to get going.

Be Patient 

The bear market won’t last forever. Eventually, the market will rebound, and those who have held onto their investments will see profits. Not everyone has a chance to be patient, but those who can hold on will likely see a sizable profit.

Research 

Not all cryptocurrencies are created equal. Some are more likely to weather the storm than others. Do homework and invest in those with a good chance of surviving the bear market.

That means counting the big names in cryptocurrency. However, looking at intriguing startups and investing early can pay huge dividends. If one of the startups hits, it could become a huge payday.

Diversify 

Don’t put all eggs in one basket. Instead, invest in a variety of cryptocurrencies to spread out the risk. The rules can apply to those investing on their own and who don’t want to lose money if things don’t go wrong.

Diversification acts as a safeguard if anything goes wrong. There will be fewer highs and lows with overall portfolios. People need to be smart about their diversification. 

Too many people spread out and started investing in cryptocurrencies and Web3-based companies that don’t have any type of optimistic outlook.

Have a Long-Term Outlook 

Don’t think of the bear market as a short-term dip. Instead, it is an opportunity to buy low and sell high later. Long-term approaches tend to smooth out any choppiness of an investment early on.

This is true with Web3-based companies in play. No one should ever be thinking about the short term. Long-term investing in companies will make a difference, and having the funds to do so is critical.

Stay Relaxed and Trust the Process

It’s easy to get caught up in the panic of a bear market. But remember, this time will pass. Ride out the storm, and don’t make rash decisions that may be regretted later.

By following these tips, people can find success in the cryptocurrency bear market. Just be patient, do research, and stay calm. 

The market will eventually rebound, and those who have held onto their investments will see profits. Yida Gao realizes many of these tips might seem common sense, but patience is very rewardable with new markets.

Is it Smart to Invest in a Web3 Bear Market?

There is no easy answer to this question. It depends on individual risk tolerance and investment goals. Those envisioning a long-term investment horizon may be able to weather the short-term volatility of a bear market. Investing in a bear market may not be the best idea if you’re looking for immediate gains.

No matter the decision, make sure to do research and understand the risks involved before making any investment decisions. The team at Shima Capital is always doing this, and individual investors should always remain smart with their decisions to maximize success.