Crypto bear market is when the price of stocks or cryptocurrencies drops by 20% or more and the slide continues for at least two months. They typically happen every three to four years. The intervals between bear cycles in crypto markets are shorter, at about 2 years .
Here are 5 ways to survive in crypto bear market -
1. Dollar-Cost Averaging
DCA or a dollar-cost averaging strategy can help you to expand your investments by investing small amount of money.
You can divide your funds and buy a particular crypto or many cryptos when the price falls to your target. If, in the future, the price dips further, you can buy the cryptos using the allotted money so that when the price rises, you can get huge profits.
2. Diversification of Portfolio
Diversification reduces the risk involved with your investment portfolio. You might have decided to put all of your money into Bitcoin after seeing its incredible growth. You could now suffer losses during a downtrend.
Instead, you can divide your money among other cryptocurrencies so that you can still make money if any of their prices increase or decrease. Diversification reduces your risks and ensures a certain level of returns even if there are no bearish forces at play in the market.
3. Staking
Staking provides passive income growth from your cryptocurrency holdings, which you can use to cover losses during a market downturn. Your cryptos are locked up as a result, preventing panic selling.
You can choose for liquidity staking, if you want to keep your holdings liquid while you stake them, . Liquid staking earns you a derivative token in staking your crypto.
4. Yield Farming and Liquidity Mining
Yield farming increases the liquidity of the decentralized finance (Defi) platforms, and you become a liquidity provider. In order to that, a liquidity provider earns rewards on the platform.
For example, you deposit your cryptos in Uniswap. In order to that, you become a liquidity provider and eligible for earning rewards. Apart from the rewards, Uniswap also gives you UNI tokens for free. This concept is known as Liquidity Mining.Both earn you free tokens and a passive income.
5. Scalp Trading
In a bearish downtrend, scalp trading is a good alternative due to the extreme volatility of the cryptocurrency market. Simply explained, scalping is the short-term buying and selling of cryptocurrencies in order to generate small but regular profits. Over time, these gains accumulate to produce a fair return.
