Make Money When Crypto is Falling

So I guess we’re officially in a bear market. Well, at least that’s what everyone on YouTube is talking about and that’s what I’m seeing online, but just because we’re in a bear market doesn’t mean we can’t benefit from it. Luckily for you, or I should say for myself, this isn’t my first rodeo. I’ve seen this all before. Back in 2018, bitcoin dropped 80% from its all-time high. So far it’s only dropped about 60%, so trust me, I get how you’re feeling right now, and while it is tough out here in these streets, don’t worry because you got me to show you how to come out on top. I’m going to be going over how you can still profit in crypto with all this volatility that we’re seeing today.

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Okay, when bear markets come around, you need to switch your mindsets. You need to go from an “Oh, everything is crashing, I need to sell” mindset to an “Oh, everything is crashing, but that also means it’s on sale and I can get more for less” mindset. Having this type of mindset that a lot of people think they have but they really don’t is crucial to making smart financial decisions. The human brain naturally wants to hop on things that are doing really well, so when prices are high and everything is doing well, everyone wants to hop in, but when prices aren’t doing so well and everything is bad, that’s when they want to move away.

As an investor, it’s the complete opposite. When things aren’t doing well, that’s when you want to hop in because that’s when you can make the most money. So instead of being like a coin went from $100 to $200 and you telling yourself oh this is an amazing price and it’s going to go up even more, tell yourself: ‘Oh, if a price went from $200 down to $50. So if nothing really changes about it, that’s actually a steal because I can get more for less, whereas if you buy when the prices are going up, you’re actually getting less for more.’ This is the way we need to train our brains to think.

Now that we got all this out of the way, let’s get into the different strategies you can take to make some money in this bear market. So the first and least risky way to make money in this bear market is to land stable coins. You know, the ones that always stay at one dollar. You don’t have to worry about the asset moving unless, of course, you are lending it. We all know what happened with that.

The most common stable coins I recommend you lend are USDT, USDC, and DAI. They are all fiat backed, meaning for every USDT in circulation. In theory, there is an equal amount of money backing and a bank somewhere as well to hold that one dollar peg. You can lend your USDT or any other stablecoin on a lot of different platforms, but my favorites are decentralized, meaning a company can’t freeze your funds. They’re all user-friendly and they make it easy to understand what yields you’re getting. All you have to do is connect your wallet to the platform and you can start lending.

If we go on a platform, you can see the high APY they’re giving out for different coins. When we compare this to something like your chase bank account that pays you 0.01%, this is almost 600 times more.

I know there are other options, like getting a high yield savings account that pays like 1.25%, which is actually a pretty good thing, but in general, lending out a stable course will blow your savings account APY out of the water.

There are many other exchanges you can use. I won’t name any names, but these exchanges will often offer better returns. Keep in mind that these are most likely not decentralized, so at any moment they could freeze your assets and stop you from lending. It is something to consider as Congress is looking to put more regulation around stable coins after what happened with UST and Luna. If for some reason there was a bill tightening the restrictions on stable coins, these centralized companies would either have to comply with the government or they’d be out of business. I don’t think this is that big of a risk as the Fed has come out and said they have no intention of banning stable coins in crypto. However, they did heavily stress that they were going to put some regulations into space, so definitely keep this in mind if you prefer more control over your assets now.

While lending stable coins is a guaranteed strategy of making money, I wouldn’t go 100% into this during a bear market because prices are extremely low right now, which means it’s a great time to buy. That’s why I’m getting more into cryptos that have a high conviction for the long term, like coins that I see in the space for the next at least 10 years and two coins that I can stake because you know your boy loves that passive income.

As the markets have been falling, recently, I’ve just been buying more and hopefully you guys have been doing the same. You have to be smart when the market drops. This is a gift, yes, but you still have to be patient when entering. I know it looks like such a great deal when prices fall, but always remember that prices can fall even more. Sticking to an investment strategy like dollar cost averaging will help you do just this. Let’s say you had ten thousand dollars on the sidelines waiting to be invested. If you put all this money in back when the first dip happened back in December or January, that’s it. You’re out of dough for the rest of the year or until you have more money to invest, and as we’ve seen in the past couple months, the prices have been falling and falling. You wouldn’t have been able to take advantage of this because you have no money. That’s why sticking is something like putting away maybe a thousand dollars a week is a way better strategy than putting away ten thousand dollars all at once in the market.

It will not only allow you to spread out your costs, but it will also allow you to capitalize on any dips that occur. That’s exactly what I’ve been doing. For example, since I don’t necessarily stick to an every week investment strategy, but anytime I see the market dip or I have some extra money, I buy. For example, like Solana, I think that’s a great project, and as the prices have been getting cheaper and cheaper, I’ve just been accumulating more and more because I can get more for less. I’ve also been able to stake that as well. I think I get like 5.2 APY on Solana, which is basically just free money to me because I would be buying at these prices regardless. And it’s not just Solana; you can stake a lot of other cryptocurrencies.

My thing is, why not just stake them, because if you’re going to hold them and you believe in them for the long term, why not stake them and earn rewards just for holding them. The reason I stick with coins that I can stake is because I’m getting paid in two different ways; one from the price just increasing over time and the other from rewards for securing the network. The more income streams I have, the happier I am. That’s why, you might lose some money buying these coins because they might continue to fall, but if you find a coin that you can stake, you’re at least ensuring that you’re making money from your investment on the back end. Plus, it’s extremely easy to do. All you have to do is click one button and stake it, and you can get some extra money now.

Another thing that takes a little more skill and is another way to make money in the bear market is by betting against crypto. Now off the rip, I wanted to say it’s extremely hard to time markets. If you’re super bearish on crypto and think it’s going to go even lower, betting against it might not be a bad idea. You can use a platform to short coins like bitcoin and bet on a decrease in price further from what it’s at right now. Personally, I don’t think this is a terrible idea right now considering the markets, but it’s just really hard to time any market, so personally, I won’t be doing this, but I do want you guys to know that this is an option out there that you can take. If you want to make some extra money, if you wanted to short bitcoin, for example, all you would need to do is fund your account if you plan on using that to borrow the amount of bitcoin you plan to short and then sell it when it hopefully goes down.

The risk of shorting is that, theoretically, you could lose an unlimited amount of money because, technically, the lowest bitcoin could go is zero, but the highest it can go is infinity, and you’re betting on it to go down. The higher it goes up, the more you lose, so theoretically you could lose infinity. In actuality, you’ll get margin called, which means the exchange will force your account to sell those shares and you’ll have to make up the difference in the price you sold them at now. I dabbled in it a short while back and quickly found out that it’s not for me, but not to say that you can’t do it because I’ve seen a lot of my friends have some really good success from it.

It’s just that I’ve been becoming more of a macro investor that likes to look at what’s happening in the world as a whole and how it will affect the prices because I think crypto in 10 years is going to be a much bigger industry as a whole. We have people like Kevin O’Leary who’s saying it’s going to be the 12th sector of the S&P500 and maybe he’s wrong. I’m placing my bets more on the side of big money coming into space and changing the way crypto is looked at, so if you’re going to bet against it, I really wouldn’t do it for the long term.

Also, if you are going to trade on margin, just be very careful because it’s very risky. Everyone has gotten hit really badly in the crypto markets recently, and the worst mistake you can make is try to make up those losses really fast. It’s one thing to trade, but it’s another to trade with margin. If you’re down and you’re trying to recoup all your losses by borrowing and making emotional bets in crypto, you’ll probably just end up losing even more money, so please be careful.

Overall, I’m sure there are tons of other ways to make money in crypto right now. Personally, I’m just going to be lending out stable coins for that easy passive income, buying as many coins as I can at these low prices and staking them, and lastly, shorting crypto here and there and betting that it goes even further from here, which hopefully I don’t think it will. That’s all I have for you today. As always, do your own research before you invest.

[This article is a transcription of a video made by Faares Q]

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