A crypto bull market provides opportunities for everyone to make money. You just need to wait for the price of the coin to rise.
Some people may have gotten lucky and have made more money if they studied the markets and focused on investments that have the greatest potential, such as alternative layer 1s, metaverse plays, non-fungible tokens, and even meme coins.
To put it mildly, this market cycle has truly been extraordinary. Despite the fact that we had high goals, many of us aimed even higher.
We have all heard the incredibly bullish price predictions made by experts for where they see the price of Bitcoin going to this cycle. Ranging from the low-end of $100k to more bullish predictions of even potentially reaching $500k. But, what if the prices don’t actually reach those milestones?
What if the market takes a turn for the worse and that ignites the next bear market? What should you do when the music in this game of musical chairs stops, and the rush to find a chair of safety begins?
Here are your trading tips to survive and make money in a bear or correction market.
Safety First By Investing In Blue Chip Coins
While we are all in this market to make money, sometimes the most important move is to trade to preserve it. In this case that would mean running towards the blue-chip coins in the space, such as Bitcoin.
While Bitcoin did drop from its all-time high price of $20k, all the way down to under $4k back in 2018. A percentage of nearly 80%. There are two key things to pay attention to in this scenario. It held up better than many altcoins that would see their prices eventually drop up to 99% from their all-time high price.
The even more important factor was how much quicker it began to recover. By the summer of 2019, Bitcoin had already recovered to $14k, 70% of its previous all-time high, while many altcoins were still hovering near their bottoms, yet to recover.
Fast forward to today and there are still several prominent altcoins such as EOS, XRP, Dash, and Zcash which still haven’t come anywhere near their prices during the previous bull market. When a bear market begins, there is no guarantee that your coins will ever recover and you need to assemble your portfolio very carefully.
Hedging downside risks with shorting strategies
One of the key characteristics of the bear market is the tendency for prices to drop drastically from their all-time highs for an extended period of time. If you believe that prices will continue to dip even further, there are ways to make an extraordinary amount of money from this. Shorting the crypto market is one way to do this and might be an option that appeals to you.
Shorting is when traders predict that a specific coin’s price is going to decline further. If they’re right, they can make a significant amount of money. In fact, shorting is one of the few ways to make money in crypto when the price of the asset actually goes down, which is perfect during bearish market conditions.
While shorting, you’re able to sell assets that you don’t even own. Instead, the borrowed crypto is sold at current prices, which is what happens when making a short trade. If you feel confident, shorting can be a great way to maximize your profits.
Of course, there is a risk to this as well. If the trade goes the other way, there is a chance that you could be liquidated and lose everything. Never bet more than you are willing to lose.
Trade Crypto for Stablecoins in a bear market
If you have an appetite for risk, bear markets can be some of the greatest times to multiply the holdings in your portfolio. Similar to shorting, if you believe the market will continue to drop heavily there are great ways to make money. One of these options is trading into stablecoins.
The thought is that you would sell your crypto into stablecoins near the market top. Then, while the market is in turmoil and the value of those coins are plummeting in value. The fiat value of your stablecoins remains the same. There are even ways to earn a yield on those stablecoins via lending or DeFi while you hold them.
Once you believe that the coin of your choice has reached its price bottom, that is the time to trade back into your desired coins. During the summer of 2021, if you would have sold Bitcoin near the top of $64k, held onto stablecoins until Bitcoin reached its bottom of near $28k, and then re-bought Bitcoin. You could have more than doubled the amount of Bitcoin in your portfolio. All without spending any additional cash.
Although, there is a risk that comes with taking this approach. Timing the market can be an extremely difficult task. There is always the chance that you could sell your Bitcoin at $64k, and then the price could keep rising. Which would result in you having to buy your Bitcoin back at a more expensive price.
Take a longterm view with Dollar-Cost-Averaging
There is a famous phrase that says, “time in the market is more important than timing the market.” That is exactly the thesis behind dollar-cost-averaging. Which is essentially buying fixed amounts of crypto at set intervals of time.
This allows you to catch a nice average of the volatility of your crypto. The swings upward, the quiet periods in the middle, and also the dips downwards. You no longer need to worry about timing the market with the perfect purchasing price. Knowing that you are catching a great average of all price movements.
This is typically a strategy that is used by traders who have a long-term timeframe and are planning to be in the market for several years. In fact, people who dollar-cost-average often perform better over the long-term than those who only lump-sum purchase. Dollar-cost-averaging allows traders to just set it and forget it. Allowing you to not worry about day-to-day price fluctuations. Living a much more stress-free life.
If you have never experienced a bear market before, this might just be the strategy that helps you to survive the cycle. It is very easy to get caught up in the FUD during the bear market, which might result in causing you to sell your crypto much sooner than you had initially planned
Higher risk startegies: Day Trading and Leverage
Some people look at Bitcoin’s current price action and will say that it has been boring recently. That nothing is happening. For the past several weeks, Bitcoin has been bouncing around the same price range, from $42k all the way up to $52k. Moving in this zone over and over again. A range of more than 20%.
There is strong price resistance towards the top of that range, but there is also strong support near the bottom of that same range. This means that price action has been boring for those hoping for some big break either upwards or downwards beyond that.
With that said, these types of zones and price movements are golden opportunities for day traders. You can day trade on reputable exchanges like Binance. Simply wait for the prices to drop towards the lower end of this range and then buy.
Once the price has moved towards the top of that resistance, sell the coins. Then rinse and repeat that same process again. If you feel comfortable, adding leverage to these trades may be an option that appeals to you.
Using leverage increases buying power greatly by giving you the opportunity to open larger positions than you normally could using only the money in your account. This allows you to maximize your potential profits. As always, with great rewards also comes great risk.
The higher the leverage you use, allows you to make greater profits on smaller price swings. But, it also means that a sudden price movement in the opposite direction could liquidate your position just as quickly. Always be careful when trading with leverage and remember that using a stop-loss is your friend.
Using the Kucoin Trading Bot and Buying The Dips
For some, dollar-cost-averaging will be the best option as it is the least risky trading strategy. But, think back to March of 2020 when the unexpected covid price crash occurred. Causing the price of Bitcoin to drop to $3,200, Ethereum to $80, and Cardano to $0.03.
At that time if you had lump sum purchased and bought the dip, it could be an event that forever transformed your financial future. Since then Bitcoin has gone up nearly 12x, Ethereum 20x, and Cardano 50x. This is why you must always set aside cash for those days that prices are extremely deep in the red.
If you always go all-in each time you get paid with no remaining cash, you will never be able to take advantage of those dips. There is nothing worse than seeing an opportunity of a lifetime sitting right in front of you, but not having the resources to do anything about it. Bear markets are filled with these great buying opportunities.
Many of those large price spikes downwards occur for only a few moments before they are boughten up and the price quickly bounces back upwards. The chance of you being on your computer ready to buy as those drops happen is quite low. It is more likely that you will either be doing something else or possibly sleeping.
This is why setting low-bid limit orders can be an extremely useful tool. Setting a limit order for a “dream” price that you would like to buy your coin at, and then letting the exchange do the work for you.
Beyond the limit orders in the spot or futures market, there are also crypto trading bots doing this job for you. KuCoin Trading Bot is one of them, you can create your bot for a trading pair and automate the trading of buying the low and selling high automatically.
Having that bid automatically filled if prices ever reach that level. As always there is a risk that comes along with this. There is the risk of catching a falling knife when attempting to buy the dip. This means that prices could potentially continue to dip even further after you’ve made your purchase.
Take a conservative approach and Just Hodl for the longterm
If you are a person of patience and conviction, bear markets are the time when the most money is made. While similar to buying the dips, buying low and selling high is much more of a long-term approach that requires patience. Looking at the coins that have been hurt the most in corrections or bear markets and are also extremely undervalued.
This part requires you having put in your own research, knowing the market and which coins will most likely recover. Having knowledge of the project’s key fundamentals and the future that the crypto market is likely heading towards is a priceless skill to have here.
For example, look back to the previous bear market when Ethereum had dropped under $100, or Cardano had dropped under $0.03. At the time the market FUD was intense and there were debates on whether crypto was a bubble and would ever recover.
Knowing that smart contract blockchains were the future and would see huge growth would have been great alpha knowledge to have. In retrospect now, those prices were amazing buying opportunities.
Unlike buying the dips on deep red days, buying the lows or bottoms of coins is a game of patience. If you were to have bought ETH or ADA in those situations above, it would have required you to HODL them for more than two years to see them recover to their previous all-time high price and ultimately surpass them before selling to maximize your profits.
But this is when all the money is made. If you have the patience and diamond hands that are required to hold onto these assets for an extended period of time, you will be rewarded greatly.
Closing Thoughts
We all dream about bull markets and how prices might actually go to the moon. Allowing us to transform our lives and possibly gain financial freedom. But, the truth of the matter is that most of the real gains are made by the hard work that you put in during the bear markets.
When the market is quiet and no one is paying attention. Putting in the work now to learn about crypto and what will be the next big movement, will allow you to get in early and reap all of the benefits.
The big question right now isn’t how much your crypto portfolio is worth or how many coins you have. But what are you doing to improve your position and also become better in this space. This is what will make all of the difference. That is when you will understand that bear markets are actually the best times to create wealth.
