"Always buy low and sell high" is the mantra of any investment strategy. However, in bitcoin, highs arrive slowly, while lows come quickly and lightening fast, giving you the opportunity of selling at a cheaper price than when you acquired. However, given how volatile the crypto market is, one possibility that everyone should consider is how to profit in a crypto bear market. This post will show you some low-risk techniques to profit in a crypto bear market.
The crypto market's bull season is a period of explosive growth, with coins with or without strong fundamentals producing profits of up to 1000x in a matter of weeks.
The bear market is the polar opposite of the bull market, in which the value of coins fall from their ATHs (All-Time Highs) to new lows and then consolidates.
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The bear market moves slowly, providing you time to modify your position if you recognize the symptoms of impending doom.
Newcomers may mistake it for another "market correction" and be caught off guard. In most situations, rookies lose money by selling their crypto currencies for less than they paid for them when they first bought them.
How do you make money in a crypto bear market? Let’s get started.
How to Protect your Fund before a Crypto Bear Market
Your profit and cash availability are determined by the coins you have in your portfolio before a bear market sneaks up on you.
Remember that having additional cash in your portfolio is essential for making money in a bad market. However, before the bear market hits, here is some investment advice to keep in mind.
- Invest just what you are willing to lose.
- Any project should be well researched before committing to it.
- Before diving headfirst into any undertaking, think about your risk tolerance.
- Diversify your portfolio a little (Lookout for promising altcoins to acquire you some profit in the short run).
- Use professional guidance as a source of investment leverage.
For a safe bet, your portfolio should include:
- 50% Bitcoin
- 30% Eth
- 20% Alts
If you want to take a more aggressive approach to investing, make a few changes to reflect;
- 30% Bitcoin
- 30% Eth
- 40% Altcoins.
However, if you've made a certain amount of profit from your altcoins, you should take a portion of that profit and invest it in a stable coin to prepare for a down market. Your surplus USD profits would then be your leverage to make money in a crypto bear market.
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7 Risk-Free Ways to Make Money in a Crypto Bear Market
I realize you've been told not to trade, but this is a very different situation. Buying and selling during the bear market shouldn't be too difficult if you have any expertise — after all, you should have bought a lot of coins at that time.
You are still limited to the "Spot Market," as you are not trading "Futures." So there's no need to try to understand the steps if you've already been purchasing and selling coins.
When looking at the overall market, cryptocurrencies are generally in a downward trend in a bear market. However, as you zoom in, usually within the 15m and 4hr timeframes, you'll notice reversals at multiple points.
Now it's only a matter of marking the regularly occuring support level and aiming to buy there if a pattern emerges. If you buy something, aim to sell it as soon as the price rises - else, you can end up selling it for less than you paid for it.
Swing trading requires a basic understanding of pattern creation, indicators such as the RSI, and technical analysis. Swing trading is for people who have a lot of experience with technical analysis and have a high risk tolerance.
In a crypto bear market, scaling is another option to make money. Scalping is the practice of profiting from tiny price changes. It's similar to hit-and-run trading, in which you follow a market trend and ride it to a specific limit, breaking trades to earn profit in between.
If you know how to play the game, you may make a ridiculous amount of money in a matter of minutes; nevertheless, it comes with its own set of risks. All it takes is one significant miscalculation to lose all of your profits.
So, before you start scalping, make sure you have at least some basic information.
Hunt Airdrop Gems
In a crypto bear market, you may still keep your money and gain money by hunting for airdrops. During the bad market, if you are well connected in crypto groups and keep a close eye on the crypto world, you will hear about airdrops and giveaways.
Many crypto companies want to debut during bear markets in order to capitalize on the upcoming bull market. They launch airdrops to entice investors, and the majority of them turn out to be diamonds down the road. This is essentially a risk-free approach to profit in a bear market cryptocurrency.
Invest in Newer Projects
Investing in a new enterprise is another proven technique to make money during the crypto bear market. Whether in a bear or bull market, 80 percent of new crypto gems gain in price after a few days/weeks.
Invest a small amount of money you can afford to lose from your extra cash sitting idly in your portfolio into fresh crypto jewels that have just been launched. However, do your homework, read their whitepaper, and seek advice from professionals in the sector.
If the crypto coin has no genuine use case, don't buy it because it won't generate enough hype to take off.
Stake your Coins
Staking cryptocurrency is similar to investing in a bank product. Staking in crypto works similarly to investing money in a bank product like a fixed deposit and earning interest.
You can stake your coins and earn prizes on a variety of exchanges and Defi platforms. Since you aren't working for it, a little amount of interest on your original capital wouldn't harm.
This is extremely dangerous and not recommended for beginners. However, in a crypto bear market, it's one of the quickest methods to gain money.
Short selling, or shorting, is the polar opposite of buying a coin and anticipating it would rise in value (increase in price). Shorting is when you borrow coins from an exchange and forecast that the price of the coin will fall.
When you'short,' you borrow crypto to sell at current market price; when the coin's value drops, you buy the asset at a lower price, repaying the exchange the crypto borrowed and profiting on the difference.
So, in'shorting,' the goal is to'short' at a high price and 'close' at a low price — in other words, to sell high and buy low.
Shorting is a risk-reduction and portfolio-hedging strategy that can be quite effective in a bad market.
Get a Crypto Job
You don't want to invest, but you still want to make money using cryptocurrency? Then it's time to look for a job that pays you in cryptocurrencies rather than fiat currency.
Many crypto companies need remote jobs, and you can acquire one if you have the necessary skills.
Working in the crypto industry has its perks, including getting paid in cryptocurrencies (the company's token). And who knows, when the bull market arrives, your tokens could be worth a lot.
You can find employment openings for crypto companies on sites like coinmarketcap.com, on the company's website, or through social media channels like Telegram or Twitter.
Precautionary Steps to Take in a Crypto Down Market
When the bear market hits, there are a few things you can do to avoid getting rekt or losing your assets until the market turns green and bull again.
Dips happen, but they usually rebound to greater figures and numbers. Your emotions may play tricks on you, but remember that bitcoin is here to stay, so stay away from doubters crying "THE END."
Historically, the market has been in a bear market for more than 12 years and has always rebounded stronger, reaching new All-Time Highs.
Here are some things you can do if you're getting too emotional:
- Copy the security phrases of your wallet.
- Back them up.
- Delete your wallet app
- Take time off crypto-related news
Do this while waiting and ‘HODLING.’
Now is the moment to HODL if you've conquered your first fear.
There's nothing to be afraid about as long as you're holding Bitcoin and high-quality altcoin jewels. Once the market begins to pick, 'Hodling' will allow you to enter it without difficulty.
Alternatively, you can add more coins and buy the dips while 'hodling.' You will have an advantage over those that panic sold when the bull market arrives.
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Conclusion on the 7 Risk-Free ways to Make Money in a Crypto Bear Market
When the market is in a downward trend, don't make hasty decisions. You will not profit by selling coins at a low price during a bear market. Instead, you can increase your cryptocurrency holdings and diversify your portfolio. So that when the market picks up again, you'll be in a better position.
Always remember that every recession ends with a recovery — that's how the economy works.