How To Make Money From Crypto In A Bear Market
Crypto bear market or (crypto winter) is not a new concept to the old crypto investors but new investors may find it quite uncomfortable to get acquainted with this concept. The last highs of the crypto market were recorded in November 2021 after which most digital assets have lost more than 70% of their value to the ugly bear market that has been dominant since then.
While the old investors who have been in the crypto ecosystem may have devised means to navigate this situation, it can be challenging for the new investors who have little or.no experience with the market volatility.
Despite the current situation of the market, many opportunities abound for those who want to earn passive income from crypto. The only difference is that crypto investors have to be smarter about it, know where to look and where not to look, know when to buy more assets and when to stop, the investment techniques that can be utilized in a bear market, the type of assets that has a potential to blowing sooner and easy ways to generate more cash during a crypto winter.
In this article, we will discuss how you can earn crypto passive income and how some crypto traders have been doing this.
Table of Contents
What Is A Bear Market?
The concept of a crypto bear market is quite similar to the traditional stock bear market.
In the traditional stock market, a bear market is described as a period when the price of a stock falls below a previous high by 20%.
Crypto analysts simply defined a crypto bear market as a period of consistent significant price fall which undermines the market confidence of investors.
A very disturbing feature of the crypto bear market is the uncertainty of its duration. It is impossible to say how long how much it will last, hence, every hope hangs in the balance during this time.
However, a popular opinion of crypto investors suggests that crypto winter is expected to linger for more than three months.
We perceived the current crypto bear market after the highs of November 2021 and till now, there’s no clear light at the end of the tunnel.
It is very impossible to guess how long we are going to wait for the new dawn but the last crypto bear market lingered for more than two years (2017-2020). Should this crypto winter replicate itself again, then we’re just starting the journey.
Does the bear market prevent investors from taking advantage of the market? Absolutely no.
Investors only study the market pattern and dictate assets selling at bargain prices and trade them.
How To Survive A Crypto Bear Market?
When one’s portfolio is constantly hit by constant depreciation, it becomes understandable for such an investor to be overwhelmed by anxiety. In this case, making a logical decision becomes difficult because almost all assets in the market have fallen in price and not even positive reports from the media can influence the market.
An investor who wishes to survive the bear market must be visionary for the long run by ignoring the current price and rather focusing on the project’s fundamentals.
Although the bear market is followed by a bullish market with high prices of assets, some assets may not recover so quickly, some others may not recover at all.
When you think of a good example of the importance of capital preservation in making investments, then you think of a bear market.
Surviving the bear market is a personal decision an investor should make, hence, utilize the advantages of the bear market.
Many platforms in the crypto industry are built to help investors earn passive income even in a bear market and these strategies will be explained in the next section.
According to Warren Buffet, “you must be greedy when others are fearful” in the long run.
Ways To Make Passive Income in a Crypto Bear Market
Despite the low prices ravaging the crypto market recently, there are still several methods to generate a passive income in a bear market. However, the current situation may pose a difficulty in locating the assets that have not been harmed by the crypto winter.
Here are some methods of generating passive income in a crypto bear market.
Staking cryptocurrency can be a great way of generating passive income for your portfolio.
Staking simply means locking crypto in a particular platform for a period to earn interest. This is likened to the savings account offered by traditional financial institutions where people save their deposits for a period and earn interest on them.
There are flexible staking (where coins can be withdrawn anytime) and fixed staking (where the crypto coins are locked for a certain period and can’t be withdrawn till the agreed date).
Investors can provide their liquidity on centralized platforms like Binance, Cryto.com etc. There are also decentralized exchanges like Uniswap.
2. Crypto Trading:
By trading crypto during a bear market, investors have the opportunity of buying assets at discounted prices and sell when the market is bullish again. However, it may be challenging to find profitable trades due to the volatility but those who have mastered the market condition may earn a considerable sum.
Traders can either trade cryptos on many established decentralized exchanges like Binance, and Kraken or decentralized exchanges like Uniswap.
It doesn’t matter if they are newbies as there are some social trading platforms which provide learning avenues and strategies among investors during a bear market.
Such social trading platforms are eToro and Robinhood.
Mining is not a new word in the crypto ecosystem. It is one of the best ways to earn passive income in a bear market, though the mining rewards are bigger in a bull market, mining can still be very profitable if an investor is determined to.
There are two different ways of mining crypto, either mine alone or align with a mining pool.
Mining means solving or finding a solution to the next block in a blockchain.
Pool mining is better than solo mining because it requires a group of people to work together and find a solution faster than one person working alone. The rewards are shared among the group according to one’s hashing power contribution.
Airdrops are simply crypto-free giveaways organised to promote and create awareness of such projects.
Developers use this method to build hype around their projects to increase their fans. Since airdrops became a thing in the crypto world, it has become a good way of generating passive income, especially in a bear market.
By joining airdrops on platforms like Airdrop Alert, and CoinMarketCap, investors can earn free crypto.
However, it is worthy of note that several airdrops are fraudulent. Fraudsters target people’s private keys by goading them to sign up on dubious platforms.
Always use reliable providers to participate in airdrops and conduct a good underground check before eliciting personal information.
There’s no certainty on when the bear market will finally come to an end and it’s no secret that a lot of investors are still earning money from the cold crypto winter.
This only proves that the market is still favourable if you s strategize properly.
There are many techniques investors can utilize to secure their assets and earn extra income from them. Given the above-listed investor will surely make extra income from the bear market.