The crypto market is on fire, some people panic, others buy the dips, Elon Musk keeps playing with investors’ nerves, Chinese miners are always on the news, Bitcoin lost over 50% of its value. Wait, it’s happened many times before, so why panic?
How the crypto market works
This is the crypto market, this is how we know it, this is how it is. In today’s lecture, I will tell you if there is a place for panic, whether we are already in a bear market, and if we are, how you can profit out of it.
In times when the bulls are greedy, the bears are enthusiastic, and the whales are happy, it’s absolute madness. Some coins grew by over 1000%, others over 20000%. Some people call it a scam, others a bubble. For me, it’s a great opportunity to invest and earn quick profits and I am super excited about living and trading in times like these.
I do not even really need to say that there is no need to panic. We have seen Bitcoin losing a lot of its value so many times, but in the long term, it always recovers. This is how the market works, so you must embrace it and learn how to manage it.
Crypto Bear Market Strategies
So today, I will share with you how I handle the bear market. I will give you 3 different tried and tested strategies that you can use if you are holding coins, but you see the price dropping.
So are we currently in a downtrend? Yes, we are. On the 13th of May, the BTC dropped below the recent low and we had new series of lower lows and lower highs. This is the very definition of a downtrend so there is no doubt about it.
And I know it is nearly impossible to sell all your crypto at its highest price during the bear market, and then wait for a new bull market. Maybe someone managed to, but he was either lucky, a genius or he lied to you.
When we are in the bull market it is relatively easy, even if you have no experience and you simply bought cryptocurrency after March 2020 you probably made some decent profits up until the 14th of May when Bitcoin reached its record high nearly touching $65 000.
I have created many lectures, courses on how I decide when to buy, what I buy, where I take the profits. I described the complete system I follow in the Cryptocurrency Investment Strategy course. You can use promo code MXW7YHW7 to get the course with a 50% discount).
But that is the easy part, right? How about when Elon Musk says Bitcoin miners use a lot of carbon, and the price goes into a freefall. Wait, he didn’t know that back in February when Tesla bought Bitcoin? I guess he missed that information 🙂
Crypto Bear Market – Strategy #1
So here’s strategy number 1 for the crypto bear market. Take Profits with the coins you have that have had decent growth and swap them into USDC or USDT coins.
For beginners, USDC and USDT are stable coins that are pegged to the American dollar.
So no matter how far the market crashes, you won’t lose the value in your portfolio. And I will share with you how exactly I do it.
When I have an exit signal, and I am happy with the profits I have made with the coin, I swap to USDC, for example. And the reason I swap to a stable coin is that on many exchanges you can stake and earn passive income on the stable coins.
For example, on Crypto.com you can earn up to 12% interest so you can even profit when the market keeps dropping. The moment you see the new Bullish trend, you can start buying again.
On my Patreon page where I share all my investments, I also shared the spreadsheet I use. There I keep track of all current coins I hold. If I buy, I add more, if I sell any, I remove them. So when the crypto market is negative, or in other words, it’s a bear market, I usually do not sell everything. I keep a bigger portion of my capital in stable coins so I can earn passive income. And when we are in a bullish market, I keep fewer stable coins and more Bitcoin, Ethereum, and all the others you can see on the spreadsheet.
So, to make it simple, when the market is negative, I keep more of my investments in stable coins, usually in USDC. This way I earn passive income while the BTC and rest are going down. When the market recovers and starts climbing again, I start buying the Top Coins again.
Trading Strategy #2
And here comes strategy number 2. When the crypto market is bear (negative) always invest in the top cryptocurrencies. These are the cryptos that are well-established, that have a huge market cap, and their technology is already proven.
Whether you are buying the dips or improving your average price, something I like to do, it’s best to put your money on the top 10 or 15 coins by market cap.
Because we’ve already seen many times that when the crypto market starts to recover from “bear” movements the top coins are more likely to reach new record highs compared to some small altcoins that might never regain value.
Trading Strategy #3 for the crypto bear market
Strategy number 3 is a bit more advanced and riskier. With some of the platforms and especially with the Forex brokers that offer cryptos we can sell the asset without owning it. This is called CFD trading, and it stands for contract for difference. I will try to explain it as simply as possible.
I can fund an account with a certain amount of money. Let’s say $10 000 and when I see a clear crypto bear market, the Bitcoin drops and gives me sell signals, I can open a short position and sell the Bitcoin, even if I did not have any in that account.
The sell order is a Contract for Difference with the broker that if I sell and the price drops, the broker must pay me the difference. Or the profit. Of course, if the price goes up against me, I will have a loss.
Therefore you need to have experience in trading because shorting Bitcoin might go very wrong. Just like the huge hedge fund that nearly bankrupted shorting the GameStop. Simply put there is no ceiling for the price.
Let’s say you sold the Bitcoin at $50 000 but instead of dropping to $30 000 it went higher to $100 000 or even #200 000, then you will be dealing with a loss of $150 000. In this case, you have to use a Stop Loss to protect your capital. Or you can use Expert Advisors, the so-called Robots, that I use and show in many of my courses. The EAs will manage and close the trade when the market goes against our position.
To summarise, if you are buying crypto, let’s say you bought 1 Bitcoin, and you see the bear market, you can sell at the same time and avoid losses if you trade the same quantity or even have more profits if you use leverage while selling. When the market starts to reverse and you recognize the new up-trend you can close your short position on a profit and leave only the coins you have in your wallet.
I have been using these 3 trading strategies since 2018 and they worked well for me. To repeat, the 3rd strategy is a bit riskier and requires some trading experience, but you can practice it on a virtual account.
Let me know how you handle the crypto bear market in the comments below. I will be happy to hear some more ideas. Thank you, guys, for reading and take it easy. There’s no need to panic.