For seasoned investors, a bear market is nothing new. It has happened before, and it will happen again, even in the crypto sphere. There are several strategies and ideas you can make use of to get through it… if you play your cards right.
What exactly is a crypto bear market?
In traditional markets, a bear market is broadly defined as any time market prices fall more than 20% from a previous high. In crypto, since there can be highs and lows in any given day, a bear market can be better described as an extended period of time (three months or so) where prices fall significantly, and market confidence decreases.
Some ways to earn crypto in the current financial climate
Buy the crypto dip
You have probably heard investors saying the words: “buy the dip” as a tactic during a bear market. But what does it mean? Basically, it simply refers to buying assets (in this case, crypto) when the price is down. By doing this, when the prices go up again, you will reap the benefits.
Diversify your crypto portfolio
The more you diversify your portfolio, the lower your risk is during a crypto bear market. This is because, although many cryptocurrencies will lose value, not all of them will. For example, in the current bear market, Bitcoin and Ethereum have tended to drop; however, some other cryptocurrencies have actually gone up at various points in time.
Of course, this does not mean that you should blindly invest in loads of altcoins without doing your ‘homework’. To pick a possible winner, you should check out factors such as past performance and previous all-time highs. To be clear – this does not mean that they will definitely make you money, but it can help you separate the wheat from the chaff.
Don’t ‘panic sell’
Seasoned investors know that bear markets will come and go. But as a new investor in crypto, suddenly seeing your investment so down and down may spark panic. The first reaction may be to sell everything and cut your losses before the situation ‘gets worse’. However, this actually may be one of the worst things to do!
If you devise a long-term plan/strategy, and never invest more that you are willing to lose, you can ride the bear market wave and come out even stronger.
Yield farming is when you ‘lock in’ your cryptocurrencies on a platform to earn interest on them, similar to holding your money in a savings account. The amount of interest is based both on how much you leave in, as well as how popular the particular token is at the time.
Your tokens will then be lent out to other users, who are taking out loans at a variety of interest rates. You are rewarded with that interest in the form of the platform’s token, and you can also earn tokens for participating on the platform.
Staking is a great strategy to create a passive income from your crypto. Like yield farming, it also means locking in your cryptocurrencies. The difference is that, rather than lending them out for loans, they is used to validate transactions on a Blockchain network. This is also known as a Proof-of-Stake (PoS) consensus method.
The more you stake, the more priority you’re given to validate transactions, and, therefore, the more you earn.
Work in crypto
Even with the recent downturn in fortunes, there are still plenty of jobs in the crypto industry – in the marketing, finance, and management sectors for instance – many of which pay in cryptocurrency (which will become more valuable once the bear market is over). Of course, this ‘tip’ applies to those who have an understanding (and interest) on how the crypto market works
Create your own NFTs
You might not be able to make millions like the artist known as Beeple, but, if you are interested in NFTs and think that you have a great idea, why not learn how to create them? You never know – you just might be the ‘next big thing’! Not sure where to start? Check out our exclusive guide to NFTs.
This blog is for information purposes only and does not constitute financial advice. Investment decisions should not be taken on the back of reading this blog. Please speak to your financial advisor for more information or click here to arrange a meeting with a financial advisor.