Learn from 'Bear Market Investing”: Identify the Best Opportunities and Take Advantage of the Bull Market's Added Value

Original source: Pavel Paramonov X Account

What can we learn from bear market investing? How to truly benefit from bull market/pre-bull market investing?

1. First, less capital is available in a bear market, which creates more opportunities for VCs

Why is this good? In a bear market, although there is less money available, it does not mean that there is no money at all. With limited funds, VCs tend to find better projects rather than spread their money across dozens of startups.

Investors are more committed to supporting founders because not everyone can survive a bear market. Furthermore, in a bull market, it is almost impossible for Tier III and Tier IV VCs to be stakeholders in a good protocol because they cannot compete with Tier I and Tier II companies like @polychain, @blockchaincap, @PanteraCapital, @variantfund, etc. .

These top companies bring not only capital, but also their expertise in various fields, as well as their reputation. If a speculator sees a shiny primary or secondary investor on the capital table, they will automatically be more interested in the project during a bull market.

In a bear market, you have to be more picky and focus on different factors. For example, @Signum_Capital invested in @Polymer_Labs in March 2022.

I’m not saying Signum Capital is a bad VC, but honestly, they are not a Tier 1 or Tier 2 VC either.

It takes some research and talent to identify the best investment opportunities, but even if you're smart enough to identify them, you probably won't get into them. Why? Because you are not famous yet. But this is possible in a bear market because bear markets typically don't allow the best VCs to get good deals because the risk/reward ratio is different.

2. Secondly, builders are more committed and this commitment cannot be faked or simulated

I mean more committed. Not everyone survives in a bear market, so surviving in a bear market requires exceptional talent and hard work. Builders will understand when I say it's harder to raise money in a bear market. Very difficult.

You have to have a great idea, a great survival plan, a "Real Madrid" team, and you still have to maintain a low fever rate and a long runway. At this stage, efficiency and investment levels have basically reached their peak.

Builders are forced to make their products a huge success. As the old saying goes, "You have to be eager to achieve the greatest results." @monad_xyz is the perfect example, a truly foundational project with great mechanics that fills every gap.

• Great team (ex @jumptrading)
• Great investment (building during a bear market phase)
• Great marketing and content
• Great community building strategy (@intern)
• @paradigm @cbventures @ElectricCapital@ egirl_capital, @dragonfly_xyz @shimacapital @placeholdervc

Second round one from @dragonfly_xyz, @shimacapital and @placeholdervc and @paradigm in round two thanks to their top investment in the bear market , @cbventures, @ElectricCapital and @egirl_capital funding.

This was achieved while building one of the most renowned communities in the space, with @berachain.

However, I don’t want to mention the names of specific projects, but the things you can do during the pre-bull market phase are amazing. Basically, you can:

• Get a combination of three different modular solutions
• Combine them
• Almost no need to write a line of code
• Raised over $5 million and valued over $100 million

3. Investment plan in a bear market tend to be more attractive, and this is not because of their duration

Some may ask why investment plans are more attractive in bear markets, while in bull markets they are usually shorter, allowing investors to sell at the peak . The reason is that the time is different.

Let’s take 2022-2026 as an example. If you raise funds in 2022:

• Your TGE may be in 2024
• You release low float in pretty good market conditions
• You do daily/monthly/weekly unlocks
• You are in a pre-bull market And unlock most tokens during the bull market
• This allows for fair price discovery and some hype

If you raise funds in 2024:

• Your TGE will likely be in 2025
• You set up at least 6- for investors 12 months lock up period
• followed by 12-24 months vesting
• 6-12 months later this is the final stage of the bull market or even the beginning of the bear market
• The vesting period goes into 2026
• History shows this It's going to be a bear market
• Since there isn't a lot of hype, selling is not attractive

I'm not saying it's not attractive at all, it's just that the timeline is completely different.

How to combine the best advantages of both to make more accurate investments in the bull market?

The bull market is also a blessing. At this stage, there are very dedicated teams who have the power to select the best stakeholders and get the best "added value". You can raise a lot of capital to do some good things for the industry. Great community, opportunities, networking, and overall higher levels of engagement.

For investors, whether in liquid or illiquid assets: choose wisely, talk to people, recognize opportunities, be skeptical enough, but also be open to new ideas and see the future.

For developers: Build great tools that you want to use, not just build for the sake of building.

For speculators: keep speculating and identify the best opportunities. You cannot overestimate the importance of speculation in cryptocurrencies.

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