There is no way to increase the market's value in an unidirectional manner. The prices of a market are influenced by changes in the business cycle as well as sentiments of investors. So, even though the majority of financial markets move towards upwards over the long term however, there are times that they experience a bear phase. The Crypto market follows the same idea. However, the majority of investors are active during the Bull phase and then go into obscurity when the Bear phase begins. It is called"the fear phase.
Crypto Market Fear Vs. Greed Index: The main reason is that strategies that are successful in the Bull phase don't work in the Bear phase. Most people earn during the Bull market, however only very few emerge as winners in a Bear market. This article aims to offer you some ideas to profit in the Bear market. It's your choice what you do with them to be successful in an emaciated market.
Bull Vs Bear Markets
The term "bull market" is used to describe the reverse of the bear market. Market participants are seeing green and the prices of crypto assets have risen from their lowest levels without sliding back. Because crypto markets usually see much faster price changes than traditional ones, the standard to be considered a bull market typically is higher. The price of a company's shares exploding 20% within a week is a major event and it's not uncommon to see a cryptocurrency's value rise 50 percent or more in just a few hours. These markets are usually characterized by a prolonged period of high digital asset prices as well as a lot of high-fiving. If an investor is confident in the overall condition that the economy is in, they're often classified as "bullish".
Signals Of A Bearish Cryptocurrency Market
If you examine the indicators, it is obvious that the bears have the upper hand in the cryptocurrency market.
- The price of exchangeable assets has dropped significantly over a long period of time (way greater then 20%, in many instances).
- Investor confidence has reached its lowest point.
- New investors have left the market.
- The bad news is that FUD (fear uncertainty, uncertainty and doubt) increasing and causing asset prices to fall.
Read More: Why Should you Invest and Use Bitcoin for Payments?
The Best Methods To Profit From This Crypto Bear Market
The most effective ways to earn money in the Crypto Bear market is:
Purchase The Dip Using Dollar-Cost Averaging (DCA)
The bear stage allows the accumulation of crypto user's preferred cryptocurrency tokens for the bargain price. This is why it is important to make investments during this phase, as opposed to a Bull phase where prices are soaring. Thus, Buy the Dip is a slang term used to purchase when the market is in the bear market.
Additionally, you can purchase this Dip by purchasing it by the form of Lumpsum i.e., investing your entire money at one time. There is also an alternative method known as dollar cost averaging (DCA), a.k.a. Systematic Plan of Investment Plan (SIP).
DCA is a technique that lets you purchase small amounts of a cryptocurrency token over time. For instance, if you wish to put $100,000 into ETH (Ethereum) Token, instead of investing that $100,000 in one transaction (a.k.a. lump sum investment) then you'd split this investment into a number of purchases. Let's say that you purchase ETH worth $1000 a day for your next hundred days.
This strategy will help the billions of users in 2 ways:
- This reduces the impact of price fluctuation and lets you make an average of your investment expenses over the long term.
- It provides discipline in your investing strategy and will continue to invest only a small amount into your preferred crypto trading bots
Additionally, there are a variety of tools on the market that allow you to automate this method. This means that you do not have to complete these purchase orders by hand. It is enough to give the instructions to the platform or an automated crypto trading bot. We recommend you to check out our cryptocurrency exchange software available on the market.
Short-Selling
Short selling is among the most well-known methods to make money in the bear market or a downtrend. It's a method of trading selling an exchangeable asset, even if you do not possess it. Each investment or trading activity is governed by one principle. Buy Low and Sell High (BLSH). The only difference between the short-selling process is you sell the first and purchase later. It is expected that the cost of a cryptocurrency could be lower in the near future than the current value.
As an example, let's say that the ETH token is in a downward trend. At present, it's trading at $3000. It is expected to increase to $2,500. Therefore, you'll short sell ETH today, i.e., at $3,000 and then buy it at the time that it is worth $2,500. You'll earn $500 on this transaction (before the transaction costs).
In general, there are two ways to short-sell the crypto asset on an exchange:
- Futures Trading, and
- Margin Trading
To go over this in greater detail For more detail, we've created separate guides on Short Selling crypto using Binance Futures Trading and Short Selling crypto exchange using Binance Margin Trading. Additionally, you can also find out how to short Sell Bitcoin by using ByBit.
Crypto Credit And Saving
If your investments are at risk of losses during a bear period the option of lending or savings is an effective method to generate passive revenue from cryptocurrency investments.
The advantage in these methods is:
- You will receive a cryptocurrency token for depositing your funds on an exchange or protocol and
- These tokens are free and let you cover the losses that resulted from the market downturn.
Crypto Savings helps crypto users to store your money as well as gain interest on these funds. A lot of exchanges offer such wallet services. Advanced features are offered both in decentralized and centralized ecosystems. In the centralized exchange systems, Binance offers the Binance Savings feature.
In addition, you are also able to offer to lend your cryptocurrency investments to make interest. We recommend the Binance Lending Guide to explore more details about this. However, lending carries the risk of being unable to pay an outside party that could cause losses in some instances. This is why you should only use reputable platforms. In addition, make sure that the platform only lends with the backing of the lender.
A few of the most well-known crypto lending platforms include:
- NEXO
- AAVE
- Compound
- MakerDAO
Crypto Staking
Staking is a different method to earn passive income from your cryptocurrency tokens. The crypto payments are secured on an exchange, and the platform pays you more tokens.
The benefits of staking your crypto-tokens in an bear-phase are as the following:
- You can get crypto tokens at no cost.
- You are able to cover the losses you suffered due to the bear phase.
- Your money is secure in a secure wallet platform thereby you are able to avoid panic selling.
Staking is similar to making dividends from your equity stock. This is a strategy that is used to create Blockchain networks that use Proof of Stake (PoS) blockchain technology. You can find the annual base Staking Rewards regarding these tokens in the following manner:
Crypto Bear Market Staking: Let's consider the Solana network as an illustration. Every time you put SOL tokens in the Solana Network, it helps to secure the network. In return the network provides you with additional SOL tokens.
As mentioned previously, when Staking the funds you have are held in an popular exchange. There is no liquidity when your assets are being staked. Liquid Staking provides a solution for this. Liquid Staking is a concept which gives you an exchange token to stake your assets. The largest Decentralized Liquid Stacking Platform available is Lido Finance.
Let's use the same SOL (Solana) instance. If you invest SOL tokens with Lido Finance, then you receive SOL tokens. This can be described as a receipt for SOL tokens staked. You can now use the SOL tokens in a variety of ways:
- You can lend them to DeFi (Decentralised Finance) platforms to make more money.
- They can be sold on the market for sale if you wish to sell SOL's stake.
Thus, you can keep the funds in a state of liquidity even if they're invested through the exchange partner. When you are aware of the basics of what Staking is about, look through our list of the most lucrative Proof of Stake cryptocurrencies.
Read More: Smart Contracts are Coming to Bitcoin Through Dfinity's Internet Computer
Yield Farming And Liquidity Mining
Yield Farming and Liquidity Mining allows you to earn crypto tokens free for offering liquidity to the DeFi (Decentralized Finance) platforms. Yield farming is a method that allows a crypto-holder to transfer his investment to a Platform called DeFi. Therefore, since the holder of the crypto exchange provides liquidity to the platform they become also known by the name of liquidity provider.
In return they reward those who provide liquidity. These awards are typically part of the platform's earnings including transaction fees and interest derived from billions of users. This is referred to as Yield Farming. Furthermore Sometimes, the platform will airdrop or distribute its native tokens for free of cost. This is referred to by the name Liquidity Mining.
Let's look at this through an illustration. Uniswap is a Decentralised Exchange (DEX). Anyone is able to deposit crypto assets in Uniswap's Liquidity Pools. In exchange, Uniswap provides you a portion of the trading fees that the crypto exchange collects. This is referred to in Yield Farming. Furthermore, Uniswap also airdropped UNI tokens (in-house tokens of Uniswap) in the past. This is known as Liquidity Mining.
The advantages that come from Yield Farming and Liquidity Mining in bear markets are:
- You can earn crypto tokens for free by passively.
- You can cover the losses resulting from the market downturn.
For the most basic information about these subjects, look up the below guidelines:
- A Beginners' Guide to Decentralized Financing (DeFi).
- A Beginner's guide to Liquidity Pools.
- Guide to Permanent Verlusts to DeFi Customers.
Scalp Trading Using Grid Bots
The ability to automate trade strategies among the most efficient ways to make profits in the cryptocurrency market. Grid Bots lets you automate scalping strategies in trading. It lets you earn money by crypto trading while you're asleep. The final phase of a bear market in which the market displays the signs of a reverse to an upward trend is the ideal time to begin a Grid Trading Bot.
As you're probably aware that cryptocurrencies are among the most volatile assets in the present. With Grid Bots Grid Bot you can take advantage of this volatility to earn profits. When you use a grid bot you decide on an amount. Let's say you want to buy bitcoin, Ethereum Tokens, you choose a price between $2,500 and $3,500. Then, you'll divide the range into a number of grids, say 10 grids. Thus, the grid's levels will be $2,500, $2,600, $2.700, ......... $3,400 and $3,500.
When the price of ETH remains within this level You will continue earning bitcoin cash. This bot can continually purchase or sell at every price level. So, it eliminates the hassle of performing transactions manually. We've tested these bot Strategies for several couple of years and are currently. experienced Traders can earn anywhere from 0.5 percent - 1 % per day ( 15% - 30 percent in a month) with this Grid Bots.
Conclusion - Best Methods to Earn Money in the Crypto Bear Market
This is the most profitable way of getting through the Bear Market. There is no need to learn every strategy listed above. Simply pick one and study the subject thoroughly. Furthermore, each method is a distinct art in itself. Don't over-commit yourself to the process, and instead take it at your own pace.
Do you have the ability to earn money in the midst of a bear market? It is possible to make money in any market condition. Only thing that is different is the strategy you choose to employ, and this is something you must choose carefully. Please be aware that this article is solely for educational use. The content of the article is considered to be investment or trade advice. Make sure to DYOR (Do your own research) or consult with your cryptocurrency adviser before taking any form of trading or investment decision.
