Crypto Guide to Capital Management and Monet making in the Downtrend Market

The crypto world has probably experienced one of the worst days in history recently with bitcoin's price dropping from a peak of $65,000 to more than 50 percent in less than two months. Economic uncertainties from the Covid-19 pandemic and liquidity decline have been the cause of large sell-offs of Bitcoin and a host of other cryptocurrencies. Altcoins and DeFi platforms are experiencing similar problems. However, not all hopes collapse at the bitcoin price, the bear market in turn will offer a lot of opportunities, especially for those who are quick to grasp.

Coin68 last year published a tutorial to you to manage capital as well as make money in the Uptrend market. So what to do in the Downtrend? Let's learn some ways to keep the account "green" during the Downtrend season!

Effective capital management

To ensure that your money remains in your wallet and can survive long-term in the market, you need to practice effective capital management habits. Some of the principles that senior traders always follow can be mentioned:
  • Discipline: Simple understanding is clearly defining the take-profit point, the stop loss before opening the position and following it.
  • Don't trade too aggressively:This is the biggest mistake new traders make, which involves entering too randomly, using arbitrary leverage, just one flash is enough for you to get your email.
  • Reasonable capital division: Measuring and limiting risk is an important aspect of capital management. The first rule is not to invest with loans. Don't use more than 15% of your savings to get into the market. Before opening any trade order, you need to calculate its risk. Your total trading capital is a factor to determine the maximum limit for the size of the position.
  • Make a reasonable portfolio: When the market is downtrend I think you shouldn't risk investing in shitcoins, low-cap junk coins. This is extremely dangerous when you can't know when it's going to evaporate. For potential top coins, coins, you can spend 20-30% of your total capital to buy yourself a little to prepare for a "bull run" that could take place at any time.

Short Selling

Short selling can be seen as the opposite of buying a coin and expecting its price to rise. This is one of the most common methods to profit in a declining market.

A simple understanding of how this works is:

When you make a short-selling order, it means that you are borrowing money from the exchange and you are selling the property at the current market price. For example, if the price of Bitcoin is still in decline, you can make short bitcoin, when the price continues to fall deeply, you close your position and buy back at a cheaper price, thereby profiting from the spread.

This is a way to better understand short-selling.
However, if your assumption is incorrect and the price of that coin increases, you will need to re-buy the coin back at a higher market price, resulting in negative accounts. No one wants this.

To make a profit from short-selling, you need to find trends that predict a drop in market prices. Some of the ways you can know this is based on two types of analysis:
  • Technical analysis: Find support points, resistance by studying the BTC chart.
  • Fundamental Analysis: Understand market sentiment and investor reactions based on a number of ongoing events.
Crypto is a highly volatile asset class, which can yield some huge profits, but can also lead to equally serious losses.
Invest in tokens that go against the market.

Sometimes, there are a few tokens in the market that are challenging bear market. When things go down, these tokens seem to want to go against the trend. You can detect tokens that are unusually active against the trend by closely monitoring the market and comparing price patterns.

Notable examples of such coins have gathered a large number of followers thanks to their unexpected behavior. Molecular Future has an MOF token. It is one of the few coins that has made a profit in the bear market recently. When the price is nearly 50% while BTC plunges.

Swing Trading

In the bull market, the strategy of buying or holding any cryptocurrency can be profitable. But when the market is down, you should exploit the trend and take advantage of the short-term price movements of different asset classes. Experienced traders will often increase their portfolios during this period by buying more altcoins when prices are low and selling them when they reach the top of the trend.

The advantage of swing trading is to reduce the frequency of entry to the order thereby reducing the pressure that the market is causing, at the same time it can catch the big waves with the big profits of the market.

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

You can refer to Coin68's Trading 101 section to further strengthen your knowledge before trying swing trading. Detailed information here.

Earn extra income from airdrops

Downtrend time is when users reduce their interest in the market. So Airdrop is a way to engage users for marketing purposes for the product. By giving free tokens to users who have supported the project since the early days, this can be seen as a way to earn more durable and long-term income even when the market is uptrend.
Common forms of airdrops can be mentioned:
  • Retroactive: This form has been popular since Uniswap gave out its UNI token for free to users who used and interacted with the project.
  • Doing airdrop tasks: This form requires you to do tasks such as answering questions, filling out forms, participating in competitions to earn tokens as rewards.
  • Hold the host tokens: The master tokens are the native tokens of the blockchains. In this way, users only need to hold the tokens validly will be airdrop.
To find out what projects can play Airdrop to users, see more here.

Switch to passive income

If you don't feel confident enough to invest or trade on a short-term trend, then you have another option. It's about investing in platforms that can bring in passive income. To do this, there are two forms for brothers who want to try:
  • Crypto Lending:Lending cryptocurrencies. In this way, you will take your assets to lend on popular exchanges either through providers such as Celsius or Aave, or can lend your own cryptocurrency to other users and receive regular interest.
  • Crypto Staking:Cryptocurrency Deposit. You can invest in coins that operate under the Proof-of-Stake (PoS) mechanism and lock your assets on the network to receive a staking reward. While ETH's impending move to PoS is highly anticipated by the community, many other coins have supported staking rewards such as EOS, ATOM, and DASH. However when it comes to Staking rewards, each different currency will have different yields. At first glance, the deposit bonus may seem very attractive in terms of interest rates, but there are risks that you need to consider especially when the market fluctuates sharply will be very easy to cause slippage. Moreover, when new coins are minted, their supply is diluted, leading to inflation, which also affects the actual profit you receive.

Conclusions

Many people think that you should not invest in crypto when the market goes down. This is simply not true, as the Bear market is often the best time to increase your portfolio in preparation for the next bull run of the market. However, before making any investment decisions, make yourself a DYOR habit and manage capital effectively.

Here are some of the methods that I think you can use to make more profits in the bear market last week. May you be able to preserve capital and catch the opportunities that the market offers.
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