The market may be experiencing some difficult days. But that doesn’t have to stop you from finding ways to succeed. Economics faces a bleaker outlook than the Welsh air claim. Few people are quick to invest in risky assets. Crypto expert Nathan Thompson offers some tips for surviving adverse market conditions.
Option 1: Save cash to invest
There is no shame in sitting on the sidelines hoarding cash or stablecoins. When the bullish momentum returns, you’ll have plenty of dry dust to make big allocations. There are many opportunities to earn returns in the crypto markets as long as you trust the protocol you are using.
But isn’t it the timing of the market that’s impossible? Probably. But it’s about spotting momentum and general market trends, rather than more focused price targeting or flipping invitations. Bigger trends are easier to spot. But if that’s a bit risky, there is another option.
Option 2: Dollar cost average (DCA)
Have you ever visited a physiotherapist with a wrist or back complaint? You’re hoping for a quick and easy cure, right? But instead it gives you a series of worthless, boring workouts to do every day for three months. The dollar-cost average is its investment equivalent. Not sexy or even very interesting. However, given a sufficiently long time horizon, the chances of the outcome in your favor are very high. And these days, there are automated bots that do this for you. By the way, that helps too.
These first two options can be combined to form a strategy. For example, setting aside 50% on stablecoins waiting for the bullish momentum to return and putting 50% on the market regardless of price. This tactic allows for some investment in the market, which can help resist FOMO when the market rises, even if your overall thesis is bearish.
Option 3: Find assets that perform better
Decentralized stock markets have always been the darlings of the bear market. In the aftermath of the FTX scandal you followed on , traders were asking ‘where are my shorts?’ she cried, flocking to decentralized options. Many have gone to protocols like GMX and ApeX, which are up around 70% and 50% respectively this year.
In bear markets, there will always be assets that perform better. But finding them takes hard work. Also, it is risky to continue for a long time during a downtrend. Therefore, this strategy needs to be approached with caution. It is used by investors with knowledge and experience to identify the best project and implement sound risk management.
Option 4: Use derivatives to invest
There are many strategies that use derivatives and contract combinations to profit in downside and sideways markets. For example, you can use options to create a ‘bear put spread’ that allows you to make money by locking in a nice sell price at a discounted rate when an asset falls.
There are also delta-neutral strategies that advanced yield farmers use to long and short both sides of a liquidity pool. This reduces their exposure to the volatility of the assets they hold. Thus, it reduces the negative effects of collecting pool prices.
The tricky part is not implementing these strategies. Because there are easy-to-find instructions online. The power is to manage them and adjust your situation. It is possible for the administration and the size of the situation to make or break these medicine trades. They are likely to be profitable in a bear market. However, it should be used with caution.
Option 5: Keep your head while others lose
Unless you’re a free climber like Alex Honnald, you wouldn’t randomly attempt to climb a cliff without proper safety gear. The same goes for crypto investing. What safety equipment? A cash-held emergency fund is an adequate starting point. This fund should cover basic life expenses of approximately six months and should not be used for return. Additionally, this should never be borrowed or wagered on.
Also, you must have an arm’s length fund to pay for any major expenses that may arise. This fund will give you an extra buffer of leverage so you can keep your emergency fund intact and only use it for real emergencies.
Finally, recessions are difficult. So don’t forget to take care of your mental health. If you are worried about your portfolio or are always controlling prices, then you are making yourself less healthy and less likely to make good decisions when the time comes. So go out, turn off the computer and play. Improve your life outside of your investing and trading activities. If you don’t do this, where will you go when you finally succeed?