This year has seen the biggest coins in the cryptocurrency market plummet by a greater margin, even as the bear market continues.
However, as the digital coins take a nosedive, the fundamental blockchain technology provides unprecedented risk rewards. This is according to Brian Kelly, the founder, and CEO of BKCM LLC, an investment company that focuses on cryptocurrencies.
Speaking to CNBC’s “Fast Money,” Kelly said, “Last year was all about the froth,” as the crypto market witnessed overvaluation of assets such as Bitcoin. Everyone wanted to own a piece of bitcoin.
The crypto bear market has seen major cryptocurrencies on the decline, some by more than 70 percent. The price of bitcoin currently hovers between $6000 and slightly above $7000, up from $19000 in December 2017.
Kelly said, “2018 is going to be the year of infrastructure and also the year of Ethereum competitors.”
However, even as the bear market mode continues, investors need to arm themselves with practical strategies to mitigate losses. Usually, a bloody market leads to panic, especially among the unstable investors and those who have joined the market recently.
On the other hand, seasoned traders know that a crypto bear market is the best period to make long-term gains. A bull market is a ready opportunity for anyone to make money. On the contrary, a cryptocurrency bear market requires excellent trading skills, patience, and consistency to manage the pressure that comes with it. With that in mind, investors and traders can acquire great knowledge of the market during that period to carve long-term profits.
The following strategies could help you maximize gains even in a prolonged bear market such as what is witnessing in 2018.
Bear is Best
Most less experienced traders believe that once the market slumps, there is nothing much to do, but just to take a break and wait for the markets to recover. Traders with more experience and knowledge of the market do not buy this assumption. In the absence of the all-time highs, wise traders begin to think clearly, invest wisely, and when the bear market recedes, they find themselves at the helm of the pack.
A cryptocurrency such as Bitcoin does not need to increase in value for investors to make a profit. It simply needs to move. As long as you can identify the market trend, you’re good to go. A shorter timeframe calls for a greater liquidity risk but offers faster returns. From crypto exchange platforms such as Bitmex, you can find futures that mature after every eight hours.
However, beware of futures that trade altcoins such as Ripple or Litecoin because the value of bitcoin determines the tune to which the rest of the crypto market dances.
Consider Margin Trading
In simple terms, margin trading simply refers to futures on steroids. Traders who are confident could make use of the advantage to many times. Margin trading offers various benefits. For instance, two best traders on Bitmex have amassed up to 7000BTC between them. However, in normal crypto trading, you should learn to keep the coin, even if its bitcoin value dips. The higher you crank the advantage in margin trading, the slimmer the margin error becomes.
Improve on Technical Analysis
One of the things you can learn from a bear market is to do your homework, especially as far as technical analysis goes. A basic understanding of futures or margin trading is the best way to get started. Begin by understanding moving averages, RSI, Fibonacci, testnet, and others. Most traders do not have the skills to navigate the trading view monitors and by grasping the basics, you can time your entries better, even if you are not a TA pro. When the bear market ends and the green lines appear, you will have a better chance of selling at reasonable profit margins. This is better than if you hodl and suffer another brutal loss in a persistent bear market.
Consider Scalping Your Way to Profit
In a bloody crypto market, you can still make money through creaming profits from small price movements. Scalping simply refers to a smash-and-grab task that requires just your free time and willingness to complete it through successive buying and selling attempts. As in other trading strategies, scalping also has its share of risks. One major fail is enough to undo your hard day’s haul.
Find Hidden Gems
Everything looks cheap in a bear market, but not every cheap coin has value. So there is no need to rush into trades. You can use this period to research projects that seem undervalued but have the potential to grow more than ten times when the market rebounds. Check coins that dipped by nearly 70 percent from their all-time highs and you are likely to locate some that were simply unfairly knocked.
Be keen on such coins, as most crypto traders are driven by impatience. Sometimes, a coin may suffer dips due to loss of interest, perhaps because the platform is under construction. Scour Github repositories, social forums, and crypto-related news feeds to find information on projects of your interest to discover when they are about to launch.
Identify Fake ICOs
A bear market is the best time to separate fake from genuine, especially as far as ICOs are concerned. Many of the ICOs in a bull market do not hit their cap. In a bear market when most tokens trade at a loss on the exchange platforms, you have to think twice. Instead of indulging in FOMO on some ICOs that are ending soon, it is advisable to hodl your crypto asset and investigate projects that are months ahead. Read and understand their technical analysis, be acquainted with their team, and ruminate through their token use cases. Usually, skilled traders can identify a bear trap earlier enough, to avoid being caught in the mix. In the same way, researching on ICOs could help you identify a winner way ahead of the crowd.
Work for Crypto
Bear markets can truly get from bad to worse. If you can no longer pay your bills with crypto trading, perhaps you should find an alternative. Finding a crypto job is the ideal option. Many companies still hire employees in the faith that the crypto market will rebound. The best part of it is being paid in crypto, even if the assignment is not so juicy. When the market turns green, which can be in the shortest or longest time possible, you will amass a lot more from the cryptocurrency you earned.
How else can you survive crypto bearish conditions? Join the conversation over at Telegram (https://t.me/coinstaker)
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Tony is a writer for the crypto space. He presents cryptocurrency and blockchain topics to the public in a way that he only can. While carefully researched, this article should not be taken as an express investment guide. Do your own research and consult a financial advisor before you invest in cryptocurrency.