4 Ways to Make Profit in a Crypto Bear Market
In 2017, the crypto market had an epic rise. Bitcoin price climbed from just under $1,000 to $20,000 in December 2017. It was a crazy time when everyone wanted to get a slice of the crypto pie.
A lot’s happened since those days. The most optimistic expectations forecasted BTC to reach $1 million. These forecasts have not materialized. Cryptomarket dropped dramatically pulling all the altcoins down. Currently, Bitcoin stands at approximately $4,000 which is about an 80% drop from its all-time high. Nobody really knows what’s going to happen next, how far the market will fall, or how fast it may recover. Oh no, it sounds pretty depressing, right? 😟
Forecasting is usually a shot in the dark. Dozens of controversial predictions for crypto-year 2019 are proof enough. It is definitely not the best time for crypto and all we do know is that the bear is here. But it’s possible to manage digital assets effectively even during a downturn.
There are two main choices for holders during a bearish sentiment. Once the market plummeted, some people chose to sell for low before it goes any lower. Others decided to Hold On for Dear Life (HODL).
The assumption is that you believe crypto is here to stay and don’t want to give it up (or you wouldn’t be reading this). We’ve collected some opinions and possible ways on how to reduce the negative impact of the crypto market and even generate some positive income.
According to your experience and willingness to take a risk, you may want to bet on the overall market trend, make guesses on micro-trends, or just hold and make passive income. The other possibility is to borrow against your crypto to get instant cash and save assets for a long-term investment.
Option #1: Play Dead
HODLing is bored to death crypto-cliche, you must be an expert in it already if you’re reading this. But nevertheless, keeping your money intact is the best thing you can do if you believe in the long-term potential of cryptocurrency.
Making money with investments is a waiting game more than anything else, says Mati Greenspan, a senior market analyst at eToro. Speaking about the long-term, hodling might just be the right solution, especially for bitcoin holders, as Bitcoin still has significant value.
Option #2: HODL Crypto & and Get Cash Instantly
The other thing you can do to save money in the long term is making crypto-backed loans. If you’re looking for a way to cover everyday needs without having to liquidate cryptocurrency, crypto-backed lending tends to be a perfect decision.
The CoinLoan team is convinced that the loan secured by crypto is the perfect choice for those, who want to get the best out of their assets as a long-term investment. With CoinLoan lending platform anyone can use crypto as collateral and borrow some fiat instantly with no need to give up the holdings. A borrower will get all the cryptocurrency back as soon as the loan is repaid.
Moreover, capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. Since a borrower doesn’t make a profit, a crypto-backed loan doesn’t create a taxable event.
Read more about borrowing against crypto here.
Option #3: Time to Buy Dip
Over the past few months, “buying the dip” has become somewhat of a meme in the cryptocurrency space. This means buying when everyone is selling, and selling when everyone is buying. Sounds pretty obvious, but you need a lot of guts to act like this.
Thomas Lee, co-founder at Fundstrat Global, proposes to use the price distortion caused by panic selling to ride the upwards trend that follows. The only time you earn better than historical average returns is when you buy in a bear market. Despite the possible Bitcoin downside in the near term, it’s an emerging asset class and is going to carry much higher prices in the future. So if you believe that the bottom might be near and the next bull cycle is coming soon, it might be a high time to invest in crypto.
Option #4: Sell Short
There are always opportunities to make short gains to profit during a bear market. The whole idea of shorting is to sell first and buy later when the price is expected to drop. Short selling is difficult, extremely risky, and requires a good understanding of the markets to predict bounces. At the same time it can be extremely profitable.
The most famous short sale of $10 billion worth of pounds sterling was made in 1992 by George Soros. That deal brought him a profit of $1 billion during the 1992 GBP currency crisis and a nickname “The Man Who Broke the Bank of England”.
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