10 Bear Market Lessons From A Professional DeFi Yield Farmer

5 min read

This article originated from a post inside the private Mastermind at YieldFarming.com. Their head coach Zack wrote it for all its members in bear market times like these. 


Bear and bull markets are just like summer and winter. They’re inevitable but give you a massive opportunity to set yourself up for success when the next season comes.

In early 2020, during my second year of investing in the stock market, I was on top of the world.

My portfolio was up 800%.

I thought to myself, “Warren Buffet who?”

Until one day… Covid-19 took the world by storm, crushing all markets and my portfolio along with it.

It seemed like the world was ending, and everything was going to zero.

But instead, a year later, the S&P 500 was up 117%.

Summer of 2021, I had invested in crypto for about 2 years and my cross-margin trading portfolio was up to $100,000.

Once again, I felt untouchable and on top of the world.

That was about to quickly change.

Out of nowhere, China banned crypto mining. When the news broke, I was sitting in my apartment in Mexico, trading with two of my friends on high leverage without a stop-loss.

I witnessed my entire margin trading portfolio vanish overnight.

But luckily, this story has a positive ending. Because I didn’t lose my entire portfolio. I’ve always been an analytical, calculated investor at heart. The majority of my portfolio have always included a sound crypto strategy without making any uneducated “bets.”

Even though the loss stung for a short while, I didn’t want to feel sorry for myself, or worse, forever exiting the markets. Instead, I chose this to be my hard-earned lesson.

As a result of doubling down on my usual “low risk” strategy, and leaving the high leverage trading behind me, my returns skyrocketed shortly after as Bitcoin was up 130% and altcoins up 300-400%.

But since I was yield farming, my personal gains exceeded that – even though I had reduced my risk after leaving the cross-margin trading behind me.

Fast forward to today, I am a professional Yield Farming coach and a full-time investor in the financial markets.

After learning from my past mistakes, and without making this a bragging post, I am now doing better than I ever have.

Not just because of the returns, but because I get the blessed opportunity to help, coach, and guide new – and seasoned – investors in DeFi and yield farming. The new world of finance where the people are in control, not the banks.

But the painful truth is that you learn more from your losses than you do from your wins, which is what this post is about.

Here Are 10 Market Lessons I Learned the Hard Way:

1. Maintaining Long-Term Focus Is Key to Stomaching the Volatility of Crypto

When you see Bitcoin drop 5%-10% in a few days, it’s easy to think that cryptocurrencies are “too risky” because of the volatility. And there is definitely some truth to that statement.

But if you take a step back and analyze Bitcoin in the last decade, you will quickly see another story. Here are Bitcoin’s yearly lows since its inception:

2012: – $4
2013: – $13
2014: – $300
2015: – $190
2016: – $360
2017: – $780
2018: – $3,200
2019: – $3,400
2020: – $3,800
2021: – $28,700

The fact is, digital assets are the best performing asset class of the decade. And that is something even the biggest anti-crypto advocates can’t ignore.

The logarithmic weekly chart of Bitcoin since 2011.

2. Bear Markets Are a Blessing if You Stay Dedicated

Previous market crashes lead to new all-time highs in my portfolio and market knowledge.

The space is cyclical and doesn’t always make sense. For example, people love to speculate and say things such as “this is the death of crypto.”

Still, the objective truth is that we always persevere and come out stronger together.

This is the time to learn, build, accumulate, and move forward.

3. Bankroll Management Principles Are More Important Than Ever

Here is your check-list:

  • Do you have an Investment Plan?
  • Are you following the All Weather Portfolio?
  • Do you invest in projects with different use cases?
  • Have you built a bull thesis on each of your positions?
  • Do you have enough due diligence to make good decisions?

These principles changed everything for me, alongside some other crucial lessons.

4. Dollar-Cost Averaging (DCA) Into BTC and ETH Trumps Everything

Market timing is incredibly difficult, even for professional investors. This simple routine is the core of long-term investing and is how most investors make it.

As a risk management strategy, dollar-cost averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of the price.

Bear markets are great for this strategy, as the lower the entry price, the better you are off on the reversal.

5. Do Not Rush With “Buying the Dip”

Instead, you should bide your time.

As David, the Founder and CEO of YieldFarming.com, always says…

“Just because your tokens are down 80% does not mean they can’t go down another 80%.”

The biggest mistake I made in my first bear market was that I immediately bought the dip with 90% of the cash I had on the side.

I then, painfully, watched all my freshly deployed capital slowly disappear by another 40% without being able to add again in the downtrend.

6. Your Bull Thesis Will Be Tested, Hard

When you are 50% down in a position, your gut will tell you whether you have truly done your homework or not.

If you’ve done proper research that aligns with your bankroll management principles, you will feel at ease and comfortable staying in your positions.

If you’ve missed this step, do your research now, then ask yourself and be honest “If I didn’t own this asset right now, would I buy it today?”

7. Bear Markets Are Not the Time to Focus on High-Risk Investments

Ponzis, tomb forks, and other “degen plays” are great in an up-trending market and can certainly be a lot of fun.

But in a downtrend bear market, there is a 99% chance you will lose your entire investment with any high-risk stuff you touch.

That’s why your best bet in times like these is to focus on BTC, ETH, and stablecoin farming.

8. Take the Time to Reflect on Your Journey so Far

Grab a pen and notebook. Next, sit down, and reflect on your decisions and how things are going so far.

  • Write down all the things you feel
  • List all the steps you took that put you in this situation
  • Brainstorm possible ways to move forward
  • Reflect on the learnings to avoid similar missteps in the future

Writing is therapeutic when one is overwhelmed and/or anxious. And it’ll help you get clarity on your goals as well. Overall, it’s a great habit I recommend for every investor serious about their progress.

9. Surround Yourself With Like-Minded Individuals

Surrounding myself with people who are either (1) more successful than me or (2) people on the same path as me has been the biggest needle mover in my life.

I moved from Europe to Canada to connect with successful crypto people and learn from them. That got me to Mexico, where I made my first “real money.”

My yield farming journey led me to connect with David and all the other amazing coaches and members in the private Mastermind. Joining this, as a member first, then becoming a coach, has probably been the biggest ROI of my life. And I’ve had some crazy “1000x returns.”

I can’t think of a better place than our community in the current market conditions. We support each other, and we develop the best possible strategies every week to navigate through the markets. And that’s why we prosper while the majority sell in panic and never make any real progress.

10. Take Care of Your Mental Health

It can feel hopeless when you endure a loss in the financial markets. But after a while, life starts to feel manageable again. Before you know it, you’ve forgotten you even lost it in the first place.

When the tide goes out, the only thing you’re left with is your skills and your knowledge. But for you to get a maximum edge in the markets, your head needs to be in the right place.

Take time to disconnect, spend time with your family, and do things that make you happy.

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