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Winter is coming! Here are 5 ways to survive a crypto bear market

diffrint by diffrint
February 5, 2022
in Market & Analysis
0
Winter is coming! Here are 5 ways to survive a crypto bear market

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The cryptocurrency market has an attention-grabbing manner of catching even probably the most seasoned veterans off guard as every bull and bear market initially exhibits similarities to earlier cycles solely to veer off in an sudden course and wipe out the fortunes of newly minted crypto millionaires. 

This was the case with the weak shut of 2021 which fully went towards the bullish $100,000 BTC value estimates that crypto analysts and influencers have been peddling nonstop.

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Presently, Bitcoin value is greater than 50% away from its $69,000 all-time excessive and altcoins have fared worse, with many down greater than 60% within the final 2 months. In instances like these, merchants must regroup and re-evaluate their funding technique, moderately than simply shopping for each value dip.

Listed below are 5 methods merchants can use to outlive an sudden crypto winter and retain as a lot worth in a single’s portfolio as potential.

Cut back publicity to extremely unstable altcoins

As soon as a widespread market downturn commences, step one to take is to reevaluate present positions and cut back publicity to probably the most unstable property.

Oftentimes these are new tasks which have come out of the trending sectors of the crypto market reminiscent of meme cash, NFTs or rebase projects like Wonderland (TIME), as a result of most of the token holders are new to the neighborhood and never long run investor just like the person bases for extra established tasks.

A great way to start the analysis course of is by a challenge’s GitHub account to see the extent of exercise and the variety of builders devoted to constructing out the protocol.

If there’s hardly any growth regardless of flashy advertising and marketing gimmicks and massive guarantees, the challenge could also be one an investor ought to minimize when the market begins to lose momentum.

Merchants may then put these funds in stablecoins that may be staked to earn yield or purchase future market dips.

Greenback-cost averaging

Greenback-cost averaging (DCA) is the method of buying an asset in tranches over time to common out the value paid and account for volatility-induced adjustments in value.

Whereas DCA technique is an effective option to improve publicity to basically sound tasks over time, it’s often finest to attend till after the mud has settled considerably and a interval of consolidation has commenced.

The main focus of dollar-cost averaging ought to be on tasks which have lively growth, engaged communities and a roadmap that lays out how the challenge will proceed to develop and stay viable sooner or later.

Staking

Staking is probably the only option to improve the worth of a portfolio long-term and it removes the strain of obsessing over day by day value fluctuations for the reason that staked asset is constant to accrue tokens.

Most layer-one protocols supply the flexibility to stake their native token on the community to earn a yield, together with Solana, Cardano, Polygon and Avalanche.

Ether holders may also stake their tokens on the beacon chain for Eth2, however it’s vital to notice that staking rewards won’t be able to be claimed till Eth2 is totally launched.

There are a lot of different staking choices on the market from gaming protocols like Axie Infinity and Illuvium to NFT marketplaces like LooksRare, so as soon as a deep dive has been made and basically sound tasks are chosen, staking turns into a matter of setting it and forgetting it.

Discover tasks with rising ecosystems and perks

Initiatives that assist token holders earn through staking, liquid staking, borrowing and airdrops are additionally value contemplating when the market turns bearish.

Staking is the only type of this because the variety of tokens will increase over time, however different choices embody token launchpads, NFT marketplaces and protocols identified for providing airdrops to community members.

One instance of a protocol the place early adopters are being rewarded is the Cosmos (ATOM) community and its rising neighborhood of tasks linked through the Interblockchain Communication Protocol (IBC).

ATOM stakers and those that have engaged with the Osmosis (OSMO) decentralized change have been rewarded with a protracted listing of airdrops from tasks launching inside the ecosystem as a manner to assist bootstrap exercise inside their communities.

Put money into your self

Some of the personally useful issues an investor can do throughout a down market is to put money into themselves by studying one thing new.

Not solely will this assist traders to keep away from the urge to promote and miss out on future positive aspects, however it may additionally result in new avenues to construct wealth.

Regardless of the market downturn, cryptocurrencies proceed to advance alongside the trail to mass adoption and the variety of jobs within the blockchain sector is barely going to extend shifting ahead.

Whether or not it’s studying to program in Solidity, experimenting with graphic and digital design to create a new line of NFTs or simply doing analysis to achieve a deeper understanding of the assorted sectors of the market.

Finally, the important thing to surviving a bear market is staying constructive and being affected person.

Need extra details about buying and selling and investing in crypto markets?

The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, it’s best to conduct your individual analysis when making a call.