What can we learn from bear market investments? How to truly benefit from a bull market and the previous bull market investments This article is sourced from Pavel Paramonov and compiled, translated, and written by Tide.
(Table of contents:
Firstly, there is less available capital in the bear, creating more opportunities for venture capital.
Secondly, builders are more committed, and this commitment be faked or simulated.
Investment plans are often more attractive in the bear market, not of their duration but due to combining the best advantages of both. How to make more accurate investments in a bull market?
Why is this good? In a bear market even though there is less available capital, it does not mean there isn’t any capital at all. Due to limited funds, venture capitalists tend to find better projects rather than spreading money across several startups.
Investors are more dedicated to supporting founders because not everyone survive in a bear market. Furthermore, during a bull market stage three and four venture capitalists are almost impossible to become stakeholders due to their inability to compete level one and two companies such as Polychain,
Blockchain Capital
,
Pantera
,
Variant Fundand others.
These top companies bring not only funding but also their expertise in various fields as as their reputation. If an investor sees a prominent level one or two investor on the table during a bullish run they will automatically become more interested in that project.
In the bear markets you have to be even pickier and focus on different factors. For example,
um Capital
invested in
Polymer Labs
in March 2022.)
(I’m not saying Signum Capital is a bad VC but frankly speaking they’re not level one or two VCs either.)
It takes some research and skill; however even if you’re smart enough it’s possible that you might not get into them yet you don’t have clout yet. But it’s possible during bear markets as they usually don’t allow top VCs with good deals because risk/reward ratio differs.
What I mean by being firmer: In the bear markets where everyone can’t survive so surviving requires exceptional skills and hard work: builders will understand what I say when raising funds during those tough times.
You gotta have great ideas,a great survival plan,a “Real Madrid” team,and still maintain low burn rate plus long runway……at this stage efficiency has basically peaked along with input levels…builders forced themselves into massive success for products….as old saying goes “you’ve got desire ifyou want the greatest rewards.”
Monad is the best example, a foundational project with great mechanisms that fills every.
Great team (former Jump Trading)
Massive investment (during bear phase of)
Great market marketing and content
Great community-building strategy (internship)
Parad, Coinbase Ventures, Electric Capital, Egirl Capital, Dragonfly,ima Capital Placeholder – they achieved this while building one of the most well-known communities in the field together with Berachain.
However, I don’t want to mention project names but what you can do in the previous bull market phase is amazing. Essentially can:
Combine three different modular solutions
Bring them together
Almost without writing a line of code
Raise over $5 million with a valuation over $100 million
Some may ask why investment plans are more attractive in bear markets while they are usually and allow investors to sell at their peak during bull markets. The reason is time.
Let’s take 2022-2026 as an. If you raise funds in 2022:
Your TGE may be in 4.
You release low circulation under quite good market conditions.
You have daily/monthly/weekly unlocksYou unlock most tokens during the pre-bull and bull market periods.
This for fair price discovery and some speculation.
If you raise funds in 2024:
Your TGE may in 2025.
You set a lock-up period for investors of at least 6-12 months.
Followed by another period of ownership from 1224 months.
After 6-12 months it’s either the final stage of a bull market or even the start of a bear market.
The period extends into 2026.
History has shown this will be a bear market.
Due to less speculation, selling becomes unattractiveI’m not saying it’s completely unattractive; just that the timeline is completely different.
Bull markets are also blessings. At stage there are highly dedicated teams who have the power to choose the best stakeholders and get best “value add.” You can raise significant capital to do good things for your industry. Great communities, opportunities,networks,and overall engagement levels are higher.
For investors whether liquid or illiquid assets: Choose wisely and communicate with people; identify opportunities; be skeptical but also open to new ideas and see into future.
For developers: Build great tools that you would use yourself rather than just building for building’s sake.
For specRelated report:
The strategy and mindset for buying in the secondary market during a bear market
Insights: Making $4 million in 7 months during a bear market: Shutting ears, opening minds
In-depth analysis of the struggle in NFT exchanges during a bear market.