How to survive a CRYPTO WINTER?
Bear Market Help:
Actual crypto wealth is created during bear markets, but no one shares practical advice other than “buy the dip” and then the dip never ends. So here’s a guidebook to make the most out of a bear market:
Your job is to survive.
You cannot reap the rewards of the next bull cycle if you lose all your capital during a bear market cycle!
Motto: Capital preservation makes life changing wealth.
Every asset worth its salt will break ATHs again, but not all projects will sustain, let alone survive. That’s why it’s important to be on the right side of the trend.
Review your portfolio diversification
- stable-coins (always a good rule to have 15% to buy dips)
- low-risk (BTC / ETH)
- medium-risk (MATIC / LUNA)
- high-risk plays (anything that is a micro-cap)
Once you have the above breakup; then decide on projects you would want to acquire for the next cycle. See the market capitalisation of top 15 cryptos and do more in-depth research about assets or sectors you truly believe in, eg: Metaverse, Layer-1, DeFi.
Caution: This is just educational Information, not Financial Advice.
A great strategy would be to stick with Layer 1's – they are the best risk to reward:ratios currently. Few examples depending on the project fundamentals, market structure, market cap & PoW
- ETH / FTM / TERRA / FTM / AVAX
These are just examples and you should DYOR on other Layer 1’s, their ecosystems and how in general they are going to help crypto in the coming years and invest with due diligence.
Stay away from higher-risk plays for now.
Everyone loves a 100x gem, to-the-moon coin, meme coins that will make you billions, but now’s NOT the time for that. The 2017 HODLers remember why.
These smaller-cap coins might be dead by the time the market recovers. They will also be majorly manipulated by the whales and you might be their exit liquidity.
Blue chips have more funding and the developer will not just rugpull and vanish in thin-air (Nothing is impossible, but chances of this happening are slim)
Safe now – Go DEGEN later.
Why be in Stablecoins?
You should be heavy in stables when the downtrend is strong (25–50%). I get it, they don’t look lucarative and it’s against the TO THE MOON narrative, but capital preservation is what will help you fulfil your crypto dreams, this is NOT a casino my friend!
Stablecoins reduce the wild swings in your portfolio and preserve capital for future buy-in’s.
Simple maths: A +20% gain is better than losing another -80% in a bear market. (-80% drawdowns are super common in a crypto bear-market)
Stablecoins also come with their own risks:
- Algorithmic stable coins can face major volatility during heavy swings in the market and the order books can make you lose your mind.
- Governments could act tough and bring in heavy regulation on them.
Diversify your stablecoins. You can also hold fiat on CoinDCX and keep converting to USDT to average your buy in regular intervals. (Not financial advice)
Rupee Cost Averaging
Example: Instead of ₹1,20,000 on ETH today, you buy ₹20,000 on the 1st of each month for the next 6 months.
So it becomes like an SIP and you save your portfolio from the volatility and also increase your purchasing power. Stack your Sats when you can.
Advanced strategy to survive the BEAR MARKET
There are some advanced strategies to make money even during the bear market.
- SHORT the downtrend:
Here you make money when the asset in in a downtrend. It makes you sell the coin at a high price and then buy at a lower price. This can be a great hedge strategy with 1x leverage; preferably with BTC and/or ETH because you won’t get rugged and there is enough liquidity available to avoid major price manipulation.
This again is a HIGH-RISK scenario if you are not lending stable-coins or something solid like BTC & ETH. Some projects with very high APY might just not perform and will never recover, making you lose all your investment.
- CoinDCX has multiple assets available for users to lend and earn an Annual Interest Rate depending on the asset that you want to lend. The interface on the app is user-friendly and shows the chosen assets APY clearly.
Image sourced from CoinDCX Pro iOS app
There is also the risk of using the wrong platform and having the platform rug you. So this needs due diligence at your end. Only stick to established names in the business.
- Increase your earning power to stack sats
- Invest in high-quality projects via SIP / DCA
- Work on researching projects, utility and the team
- Be patient and avoid PANIC SELLING. Have conviction in your plans
- Play along with a safe strategy : Avoid investing in projects that are down 90% from ATH and /or meme coins. Focus on BTC and/or ETH to maintain balance.
- Let us all just survive a strong downtrend with our capital and then WAGMI