The prolonged downturn in the crypto market has intensified fear across the industry, with falling asset prices eroding portfolio values and dampening investor sentiment.
Amid this uncertainty, Arkham has identified six strategic approaches that could help market participants navigate and profit from the ongoing crypto bear market.
6 Key Strategies to Navigate a Bear Market
Arkham explained that a bear market is a period in which asset prices fall by 20% or more from recent highs and continue trending downward over a sustained period. In traditional markets, these downturns can persist for extended periods, ranging from several weeks to multiple years.
SponsoredNotably, in the crypto market, declines are often far more severe due to heightened volatility. The firm noted that it’s not uncommon for asset prices to fall 70% to 90% from peak valuations during severe bear cycles.
“During a bear market, lower highs and lower lows dominate price action, creating a clear downtrend across the majority of timeframes…Trading volumes frequently decline during bear markets as participants exit positions or move to the sidelines to avoid further losses. This reduced liquidity can further exacerbate price movements, making them even more volatile,” the report read.
Arkham shared that bear markets can create meaningful trading opportunities for participants who apply disciplined risk management and appropriate tactics. The report highlighted several approaches that traders can use to manage exposure and potentially benefit from bearish conditions when executed properly.
1. Short Selling
According to Arkham, one of the most straightforward ways to benefit from falling prices is short selling. This involves borrowing a digital asset, selling it at the current market price, and repurchasing it later at a lower level to return to the lender. The price difference becomes profit.
However, Arkham warned that short-selling carries significant risk. Because asset prices can theoretically rise without limit, potential losses are not capped.
Sponsored Sponsored“As such, traders should practise proper position sizing and utilize stop-loss orders to limit their risk,” the firm wrote.
2. Options and Inverse Products
For traders seeking more controlled downside exposure, Arkham pointed to instruments such as put options and inverse products.
“Both of these products increase in value as prices decline, although through different mechanisms. Unlike short selling, these products have capped downside risk, meaning investors can only lose up to the amount of capital they’ve invested in these products,” Arkham stated.
For context, a put option gives the buyer the right, but not the obligation, to sell an asset at a fixed strike price before expiration. If the asset’s price declines relative to the strike price, the put typically gains value. The key advantage is that the trader’s maximum loss is limited to the premium paid for the contract.
Inverse products are designed to move opposite to an underlying asset’s performance. If the asset falls, the inverse product rises. These often include inverse ETFs that track the daily inverse return, allowing downside exposure without opening a traditional short position.
3. Range Trading
Arkham also highlighted range trading as a potential strategy in less volatile phases of a bear market. When prices move within defined support and resistance levels, traders may attempt to buy near lower boundaries and sell near upper limits.
SponsoredThe firm said that this approach is more effective in sideways conditions rather than during aggressive selloffs, where breakdowns can invalidate technical ranges quickly.
4. Accumulation
Beyond active trading, Arkham also highlighted the importance of selective accumulation. The report stressed that accumulation strategies should focus on purchasing quality assets at depressed prices rather than seeking immediate gains.
“Rather than seeking immediate profits, this approach positions traders for the next bull cycle. Disciplined accumulation during bear markets has historically generated substantial returns for patient investors, although proper asset selection remains key to reaping the returns in the next bull run,” the firm added.
5. Stablecoin Yields
For more defensive participants, Arkham noted that stablecoin yield strategies can help generate returns while waiting for more favorable market conditions. According to the report,
Sponsored Sponsored“While stablecoin yields tend to decline in bear markets, preserving capital in stablecoins while earning yield protects against further declines while gradually increasing available capital for future opportunities.”
6. Scalping and Day Trading
Arkham suggested that bear markets can also create opportunities for scalping and day trading. These strategies focus on capturing short-term price movements rather than waiting for long-term trend reversals.
In volatile downturns, rapid intraday swings, liquidity gaps, and panic-driven sell-offs can create frequent entry and exit points.
“Bear markets often feature predictable patterns during specific trading sessions, allowing skilled short-term traders to capture small profits repeatedly,” Arkham mentioned.
Scalpers typically target small price inefficiencies over minutes. Meanwhile, day traders aim to profit from broader intraday momentum shifts.
Finally, Arkham emphasized that trading during a bear phase carries meaningful risks. Reduced liquidity may result in wider spreads and slippage.
At the same time, mounting losses can heighten emotional pressure, increasing the likelihood that traders abandon their plans and compromise their discipline.
