Last Updated on October 13, 2022
The name of the game in any investment scheme is “always buy low and sell high.” But in cryptocurrency, highs come slowly, while the lows come in a swift and lightening manner, leaving you with the option of selling lower than you bought. But with the crypto space being so volatile, one option everyone should consider is how to make money in a crypto bear market. This article will show you some risk-free ways to make money in a bear market crypto.
The bull season in the crypto market is a period of insane growth, where you see coins either with good fundamentals or without, generating profit as high as 1000x within few weeks. Here’s a guide on how to make money trading such coins.
In the bear market, we experience the reverse of the bull market – where the value of coins drops from their ATH (All-Time Highs) to new lows and start consolidating there.
The bear market comes slowly, sometimes giving you room to make adjustments if you already know the signs of an oncoming bear market.
For newbies, see it as another “market correction” and end up being caught unawares. In most cases, newbies get burnt by selling lower than the initial price they bought their crypto coins.
How do you make money in a crypto bear market? Let’s get started.
How to Protect your Fund before a Crypto Bear Market
The coins you have in your portfolio before a bear market sneaks up on you determines your profit and cash availability.
Never forget, having extra cash in your portfolio is the foundation to make money in a bear market. But before the bear market, here are some investment advice you should know.
- Invest what you can bear to lose
- Do detailed research about any project and go all in.
- Consider your risk tolerance before going all into any project.
- Diversify a bit (Lookout for promising altcoins to acquire you some profit in the short run).
- Use trusted advice from professionals as leverage to invest.
Your portfolio for a safe bet should be;
- 50% Bitcoin
- 30% Eth
- 20% Alts
If you want an aggressive investing pathway, then you should tweak it a bit to reflect;
- 30% Bitcoin
- 30% Eth
- 40% Altcoins.
But once you’ve realized a certain amount of profit from your altcoins, then you should take some profit and keep it in a stable coin in anticipation of the bear market. Then to make money in a crypto bear market, your excess USD profits would be your leverage.
Best Ways to Make Money in a Crypto Bear Market
I know you’ve been advised against trading, but this is completely different. With some level of experience, buying and selling shouldn’t be much of a hassle during the bear market – at least you bought many coins then.
You aren’t trading “Futures”; you are still limited to the “Spot Market.” So no need to try to learn the steps since you’ve been buying and selling coins all the while.
Generally, in the bear market, cryptocurrencies are in a downward trend – when you look at the general market. But when you zoom in, typically between the 15m timeframe and 4hr time frame, you’d see reversals occurring at several points.
Now your job is simple – mark the frequently occurring support level and aim to buy there if you notice a pattern. Once you buy, look to sell any little increase in price – else you may go lower than you bought.
To swing trade successfully, you must have a fundamental knowledge of pattern formation, indicators like RSI, and technical analysis. Swing trade is for those who have good experience using technical analysis to analyze short-term movement and high-risk tolerance.
Scalping in crypto is another way to make money in a crypto bear market. Scalping is making profits off small price movements. It’s like a hit-and-run kind of trading, where you follow a market trend and ride it to a certain limit, breaking trades in between to collect profit.
If you understand the game well, it could fetch you an insane amount within few minutes; not forgetting that it comes with its own risks. All it takes is just one major bad call to lose all the profit you’ve acquired.
So make sure you have at least some fundamental knowledge before scalping.
Hunt Airdrop Gems
You can still keep your money and make money in a crypto bear market by hunting airdrops. If you are well connected in crypto groups and watching the crypto space closely, you will get news of airdrops and giveaways during the bear market.
Many crypto projects love launching during the bear market in anticipation of when the bull wave comes rolling. To attract investors, they launch their airdrops, of which most end up becoming gems along the line. This is like a risk-free way to make money in a bear market crypto.
Invest in Newer Projects
Another proven way to make money during the crypto bear market is to invest in a new project. 80% of new crypto gems increase in price after a few days/weeks, whether in a bear market or bull.
From your extra cash sitting idle in your portfolio, invest just a little of cash you can afford to lose into new crypto gems that are launched newly. But make sure to do your research, read their whitepaper, and ask questions from experts in the field.
If there’s no real use case for the crypto coin, don’t bother buying, as it won’t generate enough buzz to kick off.
Stake your Coins
Staking in crypto is like investing your money in a bank product. You invest your money, let’s say, in a bank product like a fixed deposit and get returns on it; that’s how staking in crypto works.
Many exchanges and Defi platforms offer you an opportunity to stake your coins and claim rewards. A little bit of interest in your original capital wouldn’t hurt since you aren’t even working for it.
This is very risky and not advisable for newbies. But in truth, it’s one of the fastest ways to make money in a crypto bear market.
As the name implies, short selling or shorting is the opposite of buying a coin and hoping it would pump (increase in price). In shorting, you borrow coins from an exchange and predict that the coin’s price would drop.
When you ‘short,’ you borrow crypto to sell at a current market price; when the value of the coin drops, you buy the asset at a lower price, repaying the exchange the crypto borrowed and making a profit on the difference.
So in ‘shorting,’ the desirable outcome is to ‘short’ at a high price and close your position at a low price – meaning you sell high and buy low.
Shorting is used to reduce risk and hedge portfolio but can be a powerful strategy in a bear market.
Get a Crypto Job
You don’t want to invest but still want to earn crypto? Then it’s time to get a job that pays you, not in fiat, but cryptocurrency.
Many crypto companies are hiring remote workers, and you can get the job as long as you have the capability.
The best thing about working in the crypto space is getting paid in cryptocurrencies (the company’s token). And when the bull market comes, your tokens might be worth a fortune – who knows?
To get job vacancies for crypto companies, you can check places like coinmarketcap.com, visit the company’s website, or get more information from social media platforms like Telegram or Twitter.
Precautionary Steps to Take in a Crypto Down Market
Once the bear market swoops on you, there are certain steps to avoid getting rekt or losing your assets until the market turns green and bull again.
Dips occur, but they often bounce back to reach higher figures and numbers. Your emotion would play you a fast one, but be away that cryptocurrency is here to stay, so avoid naysayers who are shouting “THE END.”
Historically, the market has experienced more than 12 years of the bear market, and it has always come back stronger, reaching a new All-Time-Highs.
If you are getting too emotional, here are some steps to take;
- 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.’
HODL, HODL, HODL!
If you’ve overcome the initial fear, now is the time to HODL.
As long as you are holding Bitcoin and quality altcoin gems, – [“here’s a list of some low-cap coins to hold“] there is nothing to be scared of. ‘Hodling’ will allow you to enter the market seamlessly once it starts to pick.
Alternatively, while ‘hodling,’ you can also add more coins and buy the dips. When the bull market comes, you will have an advantage over those who panic sold.
Don’t make rash decisions once the market is experiencing a downward trend. Selling coins low during the bear market will not make you profits. Instead, you can buy more crypto and add it to your portfolio. So that when the market comes alive again, you will have more profit.
Always keep in mind that recovery happens after every recession – that’s how the economy works.