5 best strategies for buying in a bear market

Bear markets can be unsettling, particularly for newer investors. Sharp drawdowns and persistent negative sentiment often create hesitation and uncertainty. However, market downturns have historically also provided attractive long-term entry opportunities.

The challenge is not whether to act, but how to approach buying decisions in a structured and disciplined way. In this article, we examine five practical strategies for accumulating assets during bearish conditions.

Key Takeaways:

• Dollar-cost averaging helps reduce timing risk and removes emotional decision-making.

• Focusing on fundamentally strong assets can improve long-term recovery potential.

• Preparing a watchlist allows you to hold a list of viable assets that you’ve researched.

• Maintaining both diversification and liquidity allows flexibility as market conditions evolve.

1. Dollar-cost averaging — reducing timing risk

Instead of trying to time the perfect bottom, invest a fixed amount at regular intervals—weekly, biweekly or monthly. This strategy, called dollar-cost averaging (DCA), removes emotion from the equation.

When prices drop, your fixed investment buys more of the asset. When they rise slightly, you buy less. Over time, you average out your purchase price and avoid the stress of calling the exact bottom.

DCA doesn’t eliminate risk, but it reduces your reliance on precise market timing. It also helps you maintain consistency during periods of uncertainty as you invest a fixed amount at regular intervals, regardless of short-term price fluctuations.

Some investors enhance this approach through “smart DCA,” which adjusts allocation size based on predefined market conditions, rather than blind investment at fixed intervals. This adds structure and flexibility, allowing exposure to scale more intentionally as opportunities emerge.

2. Focus on quality assets — distinguishing value from weakness

Bear markets tend to pressure nearly all assets, regardless of quality. The key distinction lies in whether price declines reflect temporary market sentiment shifts or structural weaknesses.

The strategies below can help you separate quality assets temporarily on sale from struggling businesses/assets facing permanent decline:

• Look for companies with strong balance sheets, consistent cash flow, low debt, and products or services people need, regardless of economic conditions.

• Historically resilient asset classes like gold and US government bonds have often acted as defensive anchors during periods of uncertainty.

• Even cryptos and web3 projects with clear utility, active development and measurable real-world use — rather than (for example) purely speculative meme coins — may eventually garner mainstream attention that unlock their full potential.

A sharp discount alone does not make an asset attractive. For instance, a 50% decline in a structurally weak asset may signal deterioration, while a 30% decline in a fundamentally strong asset may represent temporary dislocation.

The objective is not to buy what is cheapest, but to accumulate assets with long-term durability at more favorable valuations.

3. Prepare a watchlist in advance

The middle of a bear market is the worst time to start researching what to buy. Panic can cloud judgment.

Instead, maintain a watchlist of assets you’ve already researched and would be willing to hold through a full market cycle.

For each asset, define:

• the reasons you believe in its long-term potential

• price levels at which you would consider adding exposure

• the maximum allocation you’re comfortable holding

After defining these parameters, set target entry points for each asset — for example, "I'll buy Crypto A if it drops to $X," or "I'll add gold if it falls below $5,000."

Having these parameters in place reduces hesitation, and helps you act with greater clarity when opportunities emerge during a market crash, because you'll know exactly what to buy — and at what price.

4. Diversify across asset classes

Spreading your investments across multiple asset classes — such as stocks, bonds, commodities and even cash-generating assets — can soften the impact when one part of the market struggles. In a bear market, it can feel as though the value of everything is falling at once. But not all assets move the same way, or recover at the same speed. For example, stocks might rebound quickly, and bonds provide stability, while cryptos surge into double digits one day and erase their gains the next.

Commodities such as gold often shine during economic uncertainty. Digital assets, meanwhile, can remain volatile, but may recover sharply once sentiment turns.

A diversified approach ensures you're not overly exposed to one sector's struggles. It also gives you multiple paths to recovery, making it more manageable to stay invested.

5. Keep cash reserves for opportunities

This sounds counterintuitive—why hold cash when everything is cheap? 

Bear markets can make assets look attractive quickly, but prices often fall further before stabilizing. If you deploy all of your capital early, you'll have nothing left when truly exceptional opportunities appear.

A good rule is to invest 50–70% of your available capital in stages, keeping 30–50% in reserve for deeper discounts or unexpected gems. This approach allows you to scale into positions gradually, instead of committing everything at one price level.

Liquidity also reduces stress. When you have reserves, you’re less likely to feel pressure to sell long-term holdings during short-term volatility. Having liquidity gives you the flexibility to respond calmly if deeper discounts appear — instead of reacting out of frustration or fear.

Applying a structured framework during a bear market: What, when and how much

What to buy: Quality assets you understand, with strong fundamentals and long-term potential

When to buy: Regularly, through DCA, or when your predetermined price targets are hit

How much to buy: Never more than you can afford to hold for three to five years; bear markets can test your patience

Closing thoughts

Bear markets can be uncomfortable. Watching prices fall can test your patience and conviction, especially when negative headlines dominate the narrative. Nevertheless, downturns are also the times when long-term opportunities quietly begin to form.

When you stay calm, follow a plan, and buy quality assets at valuations rarely seen in bull markets, you'll find yourself better positioned when market conditions eventually improve. In that sense, discipline during downturns can matter just as much as optimism during rallies.

#LearnWithBybit