The bear market is when future billionaires are made, and if you don’t take advantage of it, you’re certainly not going to be one of them.
Remember, you make money when you buy, not when you sell. And what better time to buy or earn your favourite coins at a discount than in a bear market.
In this post, I will be sharing with you the 5 best things you can do in a bear market, including how to buy the dip even when you’re out of fiat.
Top 5 things to do in a bear market
Do nothing, ignore crypto and focus on your normal life.
Find a way to earn more crypto.
Reallocate your capital to more stable and sustainable investments.
Borrow against your existing assets and buy more of your favourite coins.
Dollar-cost-average all the way down, if you have enough fiat.
1. Do nothing and focus on your normal life
Sometimes the most profitable thing to do in a market as volatile as crypto is to do nothing.
If you have a real-life job and family, the bear market is probably the best time to take a long break off crypto and focus on your real life.
You will have to pretend for a while that you have no investments in crypto and assume that the money is gone for good.
This way, you can peacefully wait out the bear market for as long as it lasts, and you wouldn’t make any plans that involve the money you have invested in crypto.
However, this strategy of doing nothing will only work if you’re not living on your crypto investments.
If you live on crypto, then you may have to double your hustle to earn more crypto or get a real-life job that pays you in fiat.
2. Find a way to earn more crypto
The best time to start accepting crypto for your work, or work harder to earn more crypto is in a bear market.
If your job pays you in crypto, you’re getting more of your favourite coins for the same amount of work.
The goal then is to work harder to earn even more while the prices are down. Use the bear market to accumulate as much as you can and wait for the next bull run to see your money multiply.
Some ways you can do this is by:
Getting a job that pays you in crypto. You can apply to work with crypto projects as social media intern or community manager, developer (if you have the skills), marketer, or whatever you can do and get paid. They will usually pay you in their own token or a stablecoin which you can HODL or convert to the coins you want to accumulate.
Get more active, posting quality and interesting content on your paying social media and blogging platforms such as noise.cash, read.cash, Trodl, Publish0x, Steemit, Hive, etc. Again, you can decide to HODL the coins or tokens you earn from these platforms or convert them to the ones you want to accumulate.
3. Reallocate your capital to more stable and sustainable projects
Not every project that goes down with a bear market will live to see the next bull run.
Most of them that do not solve any tangible problem or have a sustainable business model will die. And a lot of investors (or gamblers) will lose their money.
You can avoid that by reallocating your capital from shitcoins and unsustainable projects into the ones with better fundamentals and a brighter future.
If you want to know what good projects look like, you can read my:
There are thousands of shitcoins and great projects out there to avoid or allocate funds to and you can identify them by yourself with a simple fundamental analysis.
Another way to play the capital reallocation game is to swap the more stable or better-performing coin in your portfolio for the ones that the price has fallen the most.
For example, if the price of BTC has fallen more relative to ETH, you can acquire more BTC by converting your ETH to BTC and vice versa.
You can compare the different coins in your portfolio and repeat this process accordingly as the market conditions changes. The goal is to possibly increase the amount of the coins you wish to HODL over time.
This strategy works best with coins you plan to HODL long term. So you can keep swapping one for the other as the opportunity presents itself.
4. Borrow against your existing assets and buy more of your favourite coins.
Yes! the bear market offers a great opportunity to buy your favourite cryptocurrencies at a discount but you’re out of fiat and you don’t have any shitcoin to sell in order to buy the dip.
How do you buy the dip even when you’re out of fiat? By using your existing crypto assets as collateral on crypto lending platforms to get a loan.
Maybe it’s time to borrow USDT against your crypto assets and use the funds to buy your favourite coins/tokens.
It’s a perfect way to raise extra cash without actually selling your existing crypto assets.
However, this strategy must be used with extreme caution because if prices keep falling, you risk your collateral assets being liquidated to recover the loan.
To avoid liquidation, you will usually be requested to top-up your collateral to maintain an acceptable loan to value (LTV) ratio or pay off all or part of the loan amount plus any accrued interest.
For me, I usually use between 10% to 40% of my maximum borrowing limit so that I don’t get surprised when the market decides to act funny.
But if liquidation is knocking on your door, you can avert or delay it by supplying the new coins you purchased back to the lending platform as collateral which further increases your borrow limit.
Use this strategy only if you know exactly what you’re doing. Otherwise, you will lose your coins to liquidation which will make the whole “buying the dip” thing worthless.
5. Dollar-cost-average all the way down if you have enough fiat
If you’re sitting on a load of cash or hold a big bag of stablecoin(s), you can divide your funds into 10 or several more equal parts and use them to buy the dip as it goes deeper.
For example, if I have $1 million of cash that I plan to use in buying the dip, I could decide to buy $10,000 worth of my favourite cryptocurrencies every week.
Whatever you decide to spend weekly or monthly in buying the dip depends on how much cash you have and how long you think the bear market will last.
The bear market offers a good opportunity to accumulate your favourite cryptocurrencies at unbelievably cheap prices.
However, it’s difficult to tell what the lowest possible price to buy will be and even if you manage to do, you may not have enough available cash to buy more.
In this post, we discussed the 5 best things you can do in a bear market to maximise the profitability of your crypto investment.
That’s why having a strategy that helps you acquire more crypto with or with extra cash is important to make the most of a bear market.
If you can afford it, take a break from crypto and leave your crypto assets as is until the market recovers.
Or better still, find ways to earn more crypto, reallocate capital from shaky projects to solid ones, borrow against your existing assets to buy cheap coins, or systematically offload your stash of cash onto crypto and wait for the next bull run.
What works for me may not work for you, so you have to determine which of these strategies best fits your unique situation and work with that.
How do you manage your portfolio in a bear market? Share with us in the comments section below.