Tips On Managing a Bear Market in Africa| Bankless Africa Newsletter
This is Bankless Africa Newsletter, a newsletter that helps you stay up to date with well-curated news about crypto and Web3 around Africa.
Hey, Bankless fam!
This season, we at Bankless Africa have had fun and joy bringing you issue after issue in this newsletter, its been a great ride and has been forecasted to be clear skies and smooth paths from here. We at the Bankless community, thank you for sticking with us through it all and we promise not to slack. In fact, now that we're nearing the end of the season, we're primed to set new records.
During the week, “why DAO is the future model of governance was discussed”. it was said that most companies have a top-down hierarchical structure put in place to handle seamless cooperation and communication, and that while this is good, the model hinders teamwork, creativity and innovation. In the event of looking for solutions for this problem, the importance of the DAO governance model was highlighted(examples including ; members being allowed to vote and make decision on matters that affects them, working in teams and having a wider pool of resources etc), and it was proclaimed that a revolution has started, and while DAOAs are not fully decentralised yet, deep and thoughtful reflections on their models can help pave way to the future of corporate governance.
Bankless Africa also had its weekly podcasts(that can be collected as NFTs) hosted by our talented miss purple and put together by the awesome podcast team. The podcast featured Chief nyamyewa who is a visual artist, story teller, and the co founder of a Nairobi - based African Animation and social impact studio. The episode explores the inspiration and ideals behind the graphic novel “Trust”, which is a piece targeted specifically at blockchain education. catch up on our podcast on all streaming platforms.
In this issue, we are going to be discussing safety measures and guidelines, on how Africans can survive in the Bear market. Grab a coffee or juice seat back and enjoy.
Dallu (welcome)
Contributors: Ekira, Chameleon, Boluwatife, Oge, anointingthompson1, Starfly, Miss Purple, Yofi A.
Tips On Managing a Bear Market in Africa
Author: Ekira
How We Can Manage the Bear Market?
The cryptocurrency market is a roller-coaster of emotions at best. It’s easy to get caught up in the hype and the fear surrounding this volatile marketplace; one moment you are feeling invincible, with seemingly unending faith in the future of digital currencies, and the next you’re questioning if you should have sold or held, rethinking every move you ever made. As an African who is interested in investing in cryptocurrencies and is simultaneously balancing a likely unstable economy, where do you stand? Would you say your emotions are holding you back from taking action? In this article, we explore how we, particularly Africans, can get through the bear market with minimal panic and offer some advice on what actions could be taken to stay resilient during times of uncertainty.
What is a Bear Market?
A bear market is an economic condition where the price of stocks and commodities drop significantly from their recent peak. In typical a bear market, stock prices drop by 20% or more. For example, the cryptocurrency market experienced a dramatic decline in monetary value in early 2018. At its peak, Bitcoin had reached almost $20,000 in December 2017, by the start of the new year, the cryptocurrency market was experiencing what many refer to as a “bloodbath,” with investors losing billions of dollars in just a few weeks. In March 2020, the S&P 500 experienced its own kind of bearish behavior which was largely triggered by the COVID-19 pandemic in the U.S; it is said to be the shortest bear market period with it having lasted only one month. A bear market is not a sign of the end for cryptocurrencies, instead, it is the time for investors to reevaluate their practices and make sure their strategies are robust enough to survive the inevitable downturn.
What causes a bear market?
A bear market can be caused by a number of factors — including but limited to the pandemic, political unrest, rising interest rates, or a general economic downturn.
Africans who are interested in cryptocurrencies have to be aware of a few things. Firstly, African cryptocurrency exchanges are not as reliable as their American or European counterparts, so you might have to be a little more careful when you make your first investment. As an African, you might have to take extra precautions when it comes to protecting your investment. This means you should:
Be careful when investing through a centralized exchange: Centralized exchanges are platforms where you can buy and sell cryptocurrencies. The most common centralized exchanges are Binance, Coinbase,Gemini, and Kraken. As great as they are, they are not regulated in the same way as a stock exchange, therefore, there is a risk that you could lose your investment if the company goes out of business, and nobody can be able to offer you security out of that kind of situation.
Take extra cybersecurity precautions: Cryptocurrencies are digital assets, often stored in a digital wallet owned by the owner of the asset. These wallets are usually required to be connected to the internet to access the assets it contains. Due to the inherent security concerns of the internet, it is important to take extra precautions when choosing wallets. Where able, one should use a hardware wallet such as a Ledger Nano S or Trezor wallet to store their assets. Using these wallets will make it much harder for hackers to steal from you, and encourage you to be very certain of every transaction you sign.
Make sure your strategy is robust enough to survive: It is important to recognize that a bear market is a normal part of the investment process. Therefore, when the market is going through a downturn, it is important to try to remain disciplined and not panic; of course, that is much easier said than done. One should make sure that they are investing in currencies they truly believe in, with the understanding that anything could happen at the drop of a hat; this will reduce the likelihood of selling at a loss should the market go through a correction.
How to manage the bear market
Don’t panic, take time to Do Your Own Research (DYOR) and understand why you bought a particular coin: If you’re feeling the pinch of the market too, you can take solace in the fact that you are most definitely not alone. At the same time, you need to be careful not to get swept up in the fear and panic of the moment, thus leading to you making irrational decisions. It is important to exercise patience and understand what exactly is driving said current downturn. This means spending time researching to understand the fundamentals behind the currencies you are holding. If you are feeling a more uncontrollable sense of panic to sell, potentially at a loss, it may be a sign that you need to take a deep breath, take a step back and reassess your strategy. The best investors are those who can resist the temptations, take time to make informed decisions and be better suited to weather the worst of storms.
Diversify your investment/holding: Make sure your portfolio is properly diversified; diversification helps to reduce portfolio risk.
Keep investing consistently: Regardless of the market conditions, it is important not to fully remove yourself from the space entirely; what I mean by this is that it is easy to completely give up when you are not able to get good plays, but doing that removes you from the frontier. Finding parts of the blockchain space to explore can help keep you anchored in some way or another.
Know yourself: Invest only what you know you are comfortable to lose.
Remember: Economic downturns don’t last forever; when in the moment, the market can be miserable to function in, but keep one thing in mind, to focus on the long term vision!
FAQS
How long do bear markets last?
A bear market can last for weeks, months or even years. Don’t try to time it, anything could happen.
Why is it called a “bear” market?
A bear market is said to get its name from the way a bear attacks its prey by swiping its claws downward. This action was said to be related to the movement of a market in that period, this is why markets with drastic downward movements are called bear markets.
What is the difference between a bear market and bull market?
A bear market is when market prices decline by 20% or more while a bull market is when the same prices increase by 20% or more. The bear market is in essence the direct opposite of a bull market.
Conclusion
The cryptocurrency market is a highly volatile marketplace that has already experienced dramatic periods of growth and declines in the past. With this in mind, it is important to be prepared for the worst, understanding that the downward trends are a normal part of the investment process. If you are interested in investing in cryptocurrencies, especially in a bear market, you need to be aware of a few things. Firstly, they need to be careful when choosing the exchanges on which to trade your cryptocurrencies. You also need to make sure you take extra care with cybersecurity precautions to protect their assets. Last but not least, you need to make sure you are investing in cryptocurrencies of your own volition, never as a way to appease anyone.
This article does not constitute financial advice. Traders and investors should always conduct their own research and make decisions relevant to their personal circumstances.
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📰 News & Opinion In and Around Africa
Middle East and North Africa are fastest-growing crypto markets
Author: Savannah Fortis
The Middle East and North regions of Africa (MENA) is currently described as the fastest growing area based on the performance of crypto markets with regards to transaction volume, revealing that users have transacted with over $566 billion in crypto since July 2021 to June 2022.
The MENA region consists at least 22 countries, which includes upcoming markets like Egypt, Morocco, and Turkey. The use cases for crypto in these countries are centred around savings preservation and remittance payments.
Although the contributions of most of the wealthier countries of the MENA regions like the Gulf nation of the United Arab Emirates to the crypto scene are considered in a different capacity, they still count as part of the core contributors of this massive growth.
Regulatory Sandbox Could Be Panacea to Crypto Regulation in Ghana
Author: Samuel Dowuona
Considering the high level of cryptocurrency adoption in the world, and its fast growth in Ghana without any form of regulation, The First Deputy Governor of the Central Bank Dr. Maxwell Opoku-Afari in his recent speech gave information about the recently launched Regulatory and Innovation Sandbox, that could server as a kind of relief for crypto regulations in Ghana.
Over the last four years, crypto exchanges based in Ghana have been evaluated and are said to account for over 400% of the increased experience in cryptocurrency trade with all of its operations, but outside of the remit of financial regulatory bodies.
Furthermore, the central bank has issued warnings to all the regulated financial institutions to not carryout transactions using cryptocurrency, the idea is that they should fully understand how to ensure the financial stability around its usage and thereby protect its users first.
Ghana eCedi CBDC Data Can Help People Get Loans, Says Bank of Ghana
Author: Kodzilla
The Bank of Ghana has been conducting offline trials of its planned CBDC in marketplaces and towns throughout the nation, where it has gained important knowledge about how the eCedi could help locals.
According to Kwame Oppong, the Bank of Ghana's Director of FinTech and Innovation, one of the insights the bank chose to focus on is that the eCedi will result in user-generated data that will help in delivering loans to ordinary people and that people can increase their loan eligibility, if they make their activity data available.
The CBDC will also enable instant settlement of transactions, which will result in cost savings compared to the current settlement infrastructure.
Africa’s Growing Gamer Scene Embraces Web3 Possibilities
Author: PYMNTS
Africa is not well known for it’s gaming ecosystem, but some regions are raising the bar for African games development.
Metaverse Magna, the largest gaming community in Africa which started off as a gaming guild, has grown into 100,000 members strong multi-guild using DAO structuring; they recently raised $3.2 million in seed raising fund, bringing their net worth to about $30 million.
Research by Newzoo in 2022 says, gamers in Middle East and Africa grew by 8.2% and in South Africa there are about 24 million gamers; Nigeria and Kenya also have the highest adoption rates for cryptocurrencies.
Crypto Making Millionaires in Nigeria Despite Government Hostility
Author: Ken Mutuku
Nigeria now accounts for nearly one-third of all cryptocurrency owners in Africa, and some citizens have become crypto millionaires.
In addition to the impressively exorbitant amount of cryptocurrency in current circulation in Nigeria, some has been diverted into other blockchain projects. The NFT market in Nigeria has and continues to grow tremendously over time.
The trade in cryptocurrencies is still prohibited by the government of Nigeria. In an effort to strengthen its fiat currency, they have gone to great lengths to keep this under wraps, such as deleting accounts linked to cryptocurrencies.
📚 Learning Centre
New to crypto and want to learn more about it? This video is packed with details, and step by step guidelines to help you in your journey.
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