Some people like to spread fear, uncertainty and doubt (aka "FUD"), no matter what the situation. In the crypto-currency market, you'll hear these people throw around words like "market crash" or "crypto winter." What they are really trying to say is that we are in a bear market. We've been there before and we'll probably be there again. That's the way the market works. But that's not necessarily a bad thing. There are many ways to profit from a crypto currency bear market. Here are four investment tips to get you started.
BEAR MARKET INVESTING TIPS: BUY LOW
Most investors see green and think that means profits. While this is not inherently wrong, there are many opportunities to be had "in the red". It is human nature to want to avoid risk. For this reason, you will see many investors panic sell during a bear market. However, this provides a unique opportunity for the risk taker. During these times, crypto is cheap, which means you can buy more of it and then sell it when the price rises to make a profit.
BEAR MARKET INVESTING TIPS: SHORTING
Shorting is when a trader predicts that the market will fall. If that prediction is correct, he profits. Crypto-currency investors can sell short with crypto-currency margin trading. Using this method, trades sell assets they don't even own yet. Instead, a borrowed asset is sold at the current price. If the market falls, and the price of the asset with it, then their position increases and traders can buy the asset at a lower price to make a profit.
Investors can also use short selling to hedge their portfolio. For example, if you have a large amount of bitcoins, you can open a new short position that reduces its volatility.
BEAR MARKET INVESTING TIPS: HODLING
What started as a crypto meme is now a legitimate strategy used by many investors. The term "HODL" essentially means that investors will not sell their crypto assets even if the market goes into the red. This is a long-term strategy and is not for the impatient. The philosophy of those using this strategy is that the crypto-currency market is still very young and new. Therefore, volatility is expected and will continue to occur until the market stabilizes. Then and only then will the market continue to take its true shape and HODLers will be rewarded for it.
HODLing can also be used in traditional markets. Take Apple co-founder Ronald Wayne, for example. In 1970, Wayne sold his shares in the company for $800. If he had waited a few decades, that $800 would be worth more than $100 billion today.
BEAR MARKET INVESTING TIPS: DIVERSIFY
Last but not least, smart crypto investors should always realize that they need to diversify their portfolio. Predicting the future of crypto is simply not possible. So if you put all your money into bitcoin, you're making a huge mistake. But if you invest in a variety of different coins, you immediately increase the chances of making a profit.
One easy way to do this is to use the crypto-currency backed lending platform. Here, you can use your large stash of Bitcoin, Ethereum, or whatever as collateral. In exchange, you get funds to buy other crypto-currencies and diversify your portfolio. After you pay back your loan, you get your crypto collateral back and your portfolio then looks stronger than ever. YouHodler is a particularly attractive lending platform because of its industry-leading loan-to-value ratio (80%), near-instant payouts, and a wide variety of crypto to choose from as collateral. So, if you want to prepare your portfolio before the next surge, start diversifying now.