Guide to Managing Capital and Making Money in the Crypto Downtrend Market

Certainly the Crypto Brothers recently had one of the worst days in history when the price of Bitcoin fell from a high of $ 65,000 to more than 50% in less than 2 months. The economic uncertainties caused by the Covid-19 pandemic and the decline in liquidity led to massive sell-offs in Bitcoin and other cryptocurrencies. Altcoins and DeFi platforms also have similar problems. However, not all hopes fall after the Bitcoin price, the bear market opposite will bring many opportunities, especially for those who grab it quickly.

The last time CoinCu posted a tutorial on managing capital and making money in the Uptrend market. So what to do in a downtrend? Let’s learn some ways to keep the account “green” during the downtrend season!

Efficient capital management

To ensure that your money stays in your wallet and can survive in the market for a long time, you need to practice effective capital management. Some principles that senior traders always follow can be mentioned:

• Discipline: Simply put, the point is to clearly define the take profit and stop loss points before opening a position and following it.
• Don’t act too aggressively: This is the biggest mistake new traders make. This involves an overly random entry and exit using arbitrary levers. A lightning bolt is all it takes to get the mail from the exchange.
• Appropriate allocation of capital: Measuring and limiting risks is an important aspect of capital management. The first rule is not to invest with money borrowed. Do not use more than 15% of your savings to enter the market. Before opening a trade, you need to calculate the risk. Your total trading capital is a factor in determining the maximum limit on the size of the position.

• Make a Sensible Investment Portfolio: In my opinion, when the market is trending down, you shouldn’t risk investing in shitcoins, which are low capitalization junk coins. This is extremely dangerous as you cannot predict when it will evaporate. For the top coins, potential coins, you can spend 20-30% of the total capital to buy something yourself to prepare for the “bull run” that can happen at any time.

Short sale

Selling short can be viewed as the opposite of buying a coin and hoping for prices to rise. This is one of the most popular ways to profit in a declining market.

Easy to understand how this works is:

When you take a short sell order, you borrow money from the exchange and sell the asset at the current market price. For example, if the Bitcoin price is still in a downtrend, you can short sell Bitcoin, if the price continues to drop sharply, close your position and buy it back at a cheaper price, taking advantage of the difference.

That way, you can better understand short selling.

However, if your assumption is wrong and the price of that coin goes up, you will have to buy back the coin at a higher market price, which will result in a negative account. Nobody wants that.

To take advantage of short selling, you need to find trends that predict a falling market price. Some ways to see this are based on the following 2 types of analysis:

• Technical Analysis: Find support and resistance points by studying the BTC chart.
• Fundamental Analysis: Understand market sentiment and investor reactions based on a series of ongoing events.

Crypto is a very volatile asset class, this strategy can generate some huge profits, but it can also lead to equally heavy losses.

Invest in tokens that go against the market

Sometimes there are a few tokens on the market that challenge the bear market. When things go down these tokens appear to be going against the trend. You can spot tokens that are abnormally bucking the trend by closely watching the market and comparing price patterns.

Notable examples of such coins have gained a large following thanks to their unexpected behavior. Typically the Molecular Future coin has the token MOF. This is one of the few coins that made a profit during the recent bear market. When the price rose nearly 50% while BTC collapsed.

Swing trading

In the bull market, the strategy of buying or holding any cryptocurrency can be profitable. But when the market is bearish, take advantage of the trend and benefit from short-term price movements of various asset classes. Seasoned traders will often increase their portfolio during this time by buying more altcoins when prices are low and selling them when they hit the top of the trend.

The benefit of swing trading is to reduce the frequency of entry, which reduces the pressure the market is exerting while allowing big waves to be made with big market profits.

However, to be successful in swing trading, you should first understand the basics of technical analysis by knowing the best entry and exit points in the market.

You can read CoinCu’s Trading 101 section to solidify your knowledge before trying swing trading. Details under Here.

Earn extra income with Airdrops

Downtrend time is when users lose interest in the market. So Airdrop is a way to get users to market the product. By giving free tokens to users who have supported the project since its inception, this can be seen as an opportunity to generate more sustainable and long-term income even when the market is upward.

Popular forms of airdrop are:

• Retrospectively: This form is popular because Uniswap issues its UNI token for free to users who have used and interacted with the project. This can be described as a pretty good airdrop when each wallet can get up to $ 1,600 at this point.

• Complete the airdrop tasks: This form requires you to work hard to complete tasks like answering questions, filling out forms, or entering contests in order to earn tokens as rewards.

• Hold master token: Host tokens are the native tokens of blockchains. This way, users who just need to keep the tokens valid will be thrown out of thin air.

For information on projects that Airdrops can issue to users, see More at Here.

Switch to passive income

If you don’t feel confident enough to invest or trade in short term trends, there is another option. It invests in platforms that can bring passive income. To do this, there are two ways you can try:

• Crypto lending: Cryptocurrency loans. This way you take your assets with you to lend on popular exchanges or through providers like Celsius or Aave, or you can lend your crypto to other users and earn interest on a regular basis.
• Crypto staking: Deposit in cryptocurrency. You can invest in Proof-of-Stake (PoS) coins and lock your assets on the network for a staking reward. While the upcoming change from ETH to PoS is eagerly awaited by the community, many other coins already support staking rewards such as: EOS, ATOM and DASH. However, when it comes to staking rewards, different coins have different returns. At first glance, the deposit bonus seems very attractive in terms of interest rates, but there are risks that you need to consider, especially in very volatile markets that can easily lead to price slides. Also, as new coins are minted, their supply is watered down, leading to inflation which also affects the actual rate of return you will get.

epilogue

Many people think that you shouldn’t be investing in Crypto when the market is falling. This is just not true as the bear market is often the best time to add to your portfolio in preparation for the next bull market. Before making any investment decisions, however, you should get into DYOR and effective capital management a habit.

Above are a few methods I believe can help you make more profits during last week’s bear market. I hope you can preserve your capital and take advantage of the opportunities the market offers.