Best Way to Make Money in a Crypto Bear Market

Dollar-cost averaging is one of the most successful crypto bear market strategies that have been tried and tested. It’s a practical case of the saying, “Do not put all your eggs into one basket.” Professional traders also prefer this method as it helps them stay profitable without exposing a massive part of their portfolio to risks. So how does it work? To use this technique, divide your funds into little portions and trade the small portfolios at intervals. For example, a trader with a $10,000 book could split it into 20 parts of $500 and trade with these smaller amounts to remain safe. While this strategy significantly reduces your chances of raking in huge profits, it ensures your account is protected from insane losses and still allows you to earn a small return. To further reduce the chances of losing, you can buy dips and target small returns per investment.

Short selling is an advanced trading strategy where one borrows an asset whose price has been anticipated to drop from a broker. This trader then sells it in the open market, expecting to buy it later at a lower price. Short selling a crypto bear market and holding it long enough can see you cash in abnormally high profits when you purchase the asset after a prolonged price downfall. Crypto short selling is simply the opposite of buying an asset, and it’s advantageous because you can make money even when the price is falling. You return the borrowed asset to your broker at the cost you borrowed, plus a commission or spread, and keep all the profits to yourself. Traders can short sell by engaging in futures trading or margin trading.

Just like people lock their funds in interest-earning bank accounts, you can make money staking your digital coins during a crypto bear market. It’s one of the best ways of raking in passive income. Keep in mind that staking only works for proof-of-stake (POS) blockchains like Ethereum, which recently switched fully to POS after completing the Merge. The best part about this investment is that you don’t need any trading expertise. Once your funds are locked in a POS platform, they automatically start earning interest and growing. The money you make on your staked account comes from validating other people’s transactions in the POS consensus system. Investors who stake significant funds get priority in validating payments and hence earn more. You eliminate the chances of panic selling as your assets are securely locked on a blockchain for a set period. When the bullish market resumes, you have a bigger portfolio to trade.

Yield farming is similar to staking, as it involves locking your money on the platform to earn interest. The difference is that your money is not used to validate transactions in yield farming, instead goes out as loans to other users and comes back with interest. The return on investment is influenced by the amount you lend and the popularity of the token. Cryptocurrencies with high demand attract good returns on yield farming. You earn your reward in the form of the platform’s native token and can choose to keep it or liquidate it in any way you deem fit. This is the same concept as fiat saving accounts. What draws the line is that fiat banks keep most of the profit and pay an insignificant amount to the saving account. In yield farming and liquidity mining, one takes home all the gain from lending. Yield farming is possible using most DeFi wallets.

Scalp trading is a form of investing where one pumps in significantly huge funds into the market and exits with the slightest profit possible. Scalpers hold their trades for the shortest time possible, typically just a few minutes. While the technique poses risks of enormous losses, it can significantly grow one’s portfolio if applied correctly. Grid trading, on the other hand, involves predetermining entry prices and opening multiple orders at once, then closing them once you achieve your objective. Grid bots make it easier for you to use this strategy while scalping, as they can speedily compute the entry parameters and implement them according to your instructions. If used correctly, grid scalping makes insane profits even when prices are nosediving.

If you have learned something new by now, you agree that research is the only way to stay ahead while trading crypto bear markets. Nobody knows when a crypto winter will start or end, or even the next price pullback. But if you invest time in expanding your skills and refining your strategy, chances are you will be among the profitable traders during bear markets. Also, remember that market behavior can change abruptly, and it’s only the prepared traders that don’t get caught off-guard. Understanding fundamentals and following top analysts will also help you stay updated with market sentiments.

It doesn’t help to lock all your funds in one crypto during a bear market. If it crashes, all your money gets nuked. The best way to reduce risks and potentially remain profitable is to diversify your funds into different assets. Spreading your cash reduces your exposure to bear market losses. This is because even if the general market trend is bearish, some digital coins will continue rising in value. Of course, you should do your homework well in selecting alternative virtual currencies that have exhibited good behavior in the past and are stable.

Emotions, be it greed during bullish markets or panic during the red seasons, are an adversary in trading. It might not be easy for everyone to manage emotions when crypto assets display double-digit losses. You might feel desperate to reduce losses by selling assets without making any analysis. Unfortunately, doing so will only leave you losing money, and you may soon start regretting it when prices recover. Unless you put funds in an asset that’s crushing, it’s possible to ride a crypto bear market and come out strongly.

If you can’t stand watching your investment being affected by declining prices, stablecoin staking is the best method to hold digital assets. As mentioned, USDT or USDC offer reliable staking options. You may consider other stablecoin alternatives, but we advise that you take precautions with algo stablecoins that don’t have any known backing. Luna was one of them and it nuked all investor’s funds at the beginning of the 2022 crypto winter when it crashed to $0 within just a few days. Consider using top crypto wallets like Trust Wallet.

Hedging is a risk management strategy commonly used by professionals to offset losses. It involves taking a position opposite to an already opened losing trade. You can hedge in the same asset or a different one with a stronger opposite movement. Hedging is meant to mitigate losses but can sometimes be counterproductive and limit one’s profits. Like any other strategy, ensure you understand how to hedge your positions before engaging in this technique.

The crypto market can be subject to abrupt changes during a bear market. While holding your portfolio, you need to carry out fundamental and technical analysis from time to time for situational awareness. Remember, one can cash out part of a portfolio and invest in another crypto or stay out of the market if their analysis shows that the asset in question may not recover. On the other hand, being aware of what is happening in the market could help you remain calm even in an insane bear period if your analysis predicts a bullish season in the near future.

As mentioned, bear markets don’t last forever. So instead of rushing to sell out your positions in losses, you should consider holding positions long-term. Prices can drop by 15% overnight; the next day, they are up by 50%. Taking a case study of BTC, its price rose from $13 to $900 between January and November 2013 before dropping by 50% within less than two weeks. Many thought that the end of it. Price stagnated until 2017 when it quickly shot to $6,000 and later to $17,000. Prices plummeted again in 2018, this time up to $3200 from a high of $19,000. During the first quarter of 2019, BTC gained value to $7,200 and later registered an over 300% gain in 2020, hitting new highs of $29.000. This is not unique to Bitcoin but is the norm in the digital coin market. Volatility is one of crypto’s trademark features. Holding your crypto assets long-term during a bear market gives you a chance to come out of losses and potentially accrue huge profits in the future.