How to Make Money During a Crypto Bear Market
LUNA crashed in a shocking Black Swan event on the 11th and 12th of May, 2022. It was not only one of the most popular cryptocurrencies around but it was also connected to another coin, UST, which thus failed to maintain its USD peg. So, like dominoes, cryptocurrencies began to crash and fall, with flurries of red candlesticks making investors’ biggest fears come true. The arrival of a crypto bear market.
If you’ve come to this article, it’s quite likely that you, too, got burned by this big flaming mess. However, it’s also possible that this bear market has re-ignited your interest in digital assets, and you might have been waiting in the wings for a dip of this magnitude to start buying coins and building your portfolio.
Regardless of your reasons, you’re here now, and we want to explore a few things that you can do to make money during a crypto bear market.
Buy the Dip!
Warren Buffett is quoted with one of the greatest pieces of business advice ever, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” What he’s saying is that right now is a great time to buy. In fact, Buffett makes most of his stock purchases during bear markets.
Should you buy this dip? Some people think we will dip further, others think we are overdue another bull run. We can’t comment on that, but buying a dip is a pretty good investment strategy if the past is anything to go by. On the one hand, you’re buying at historically low prices that could then fly up. Alternatively, if another dip is coming, you risk buying at the top of a bear market and holding for a long time for any potential recovery (that might never come).
If you feel that this recent crash is just the beginning of an even bigger bear market, you might want to consider shorting. In simple terms, shorting is where you borrow something, sell it, and then hope to buy it back more cheaply later, realizing a nice profit. It’s a little complicated at first, but once you get ti grips with it, you’ll see it can be very profitable.
You can also do this with leverage, multiplying your profits (or losses), but that is a risky game in a market that is very uncertain and unstable. Shorting is not for the faint-hearted; it’s a brutal trading style that can make or break many nerveless investors.
Move into Other Markets
When crypto is actin’ crazy, it might be a good idea to look at other markets, like stocks, oil, gold, or mutual funds. The returns might not be as lucrative, but that diminished volatility could be just what you need to ride out the storm! As long as you buy into other markets that have high liquidity when the time is right, you can sell up and quickly come back to crypto.
For many investors, the main goal of their portfolio is simply to hedge inflation. So if you can find a safe bet to at least try and hedge inflation in a crypto bear market, it will be better than sitting on losing investments.
Have Some Fun with Crypto Gambling & Gaming
With over $200bn getting wiped out of the crypto market in one day, few holders came out unscathed. In short, it was disastrous. However, with all of this doom and gloom, you might want to use those battered altcoins to have a bit of fun. Gambling might not be the best investment strategy or income route, but it can be a good laugh in dire times.
Since you can gamble with tiny fractions of a coin, it’s a good way to have fun with your crypto in a very low-risk manner while waiting for the bear market to turn back into a bull. Poker, slots, roulette, blackjack, baccarat, lottery, and so many variations of these games exist for people seeking a fun way to use their digital assets such as Bitcoin for potential winnings!
If gambling isn’t your thing, maybe gaming is. The esports industry has partnered with several cryptocurrencies to find ways to spend your coins (or earn more) while you play games online. It might not even feel like gambling, but playing games and having something at stake can really create some great engagement.
Find Investments that go Against Market Trends
Traditionally, when crypto and stocks go down, bonds go up. So buying bonds at the right time would also require you to sell your crypto at the right time. If it’s too late for you to sell your crypto without much damage, it might also be too late for you to buy bonds at a good price. However, it might not, that’s the nature of investing, you have to do your own analysis.
In the past, Gold and Silver have also appeared to be ‘safe haven assets’ for when the waters get choppy on the stock market. Unfortunately, their prices have been damaged too, though not as harshly as with crypto and stocks this time around.
How to Survive the Bear Market?
It might sound like a fridge magnet or a motivational poster, but they say life isn’t about waiting for the storm to pass; it’s about learning how to dance in the rain. If you want to get through this crash, learn how to have fun with crypto, or come up with a strategic Plan B for the next time there’s a bear market.