How Do I Invest In Crypto When It Is A Bear Market?

With Bitcoin and Ethereum trading well below their 2021 highs, many cryptocurrency investors are wondering how to profit in a crypto bear market. Bitcoin dominated financial news headlines in 2021 when it traded as values exceeded over 65,000 USD in February 2021, April 2021 , but yet this weeks it has already bear down to USD 36,600 ,it didn’t take any trader to be a master in finance to make a fortune during those times.

Photo by UnSplash.com Today’s cryptocurrency environment is vastly different. There are ebbs and flows, just like any other investment. Cryptocurrencies are generally in a bear market. Although Bitcoin is still up nearly from its low in 2015, the online currency and its counterparts experienced sharp price corrections near the end of last year, with little upside recovery until January 2022

Making Money in a Bear Market

Now that the majority of the hype has died down and clear thinking is returning, smart investors are using this bear market to research profitable strategies for the next bull market. The days of seeing cryptocurrencies hit all-time highs almost every day are over. Today’s smart currency traders understand that profits will come from small price movements.

During bear markets, most equities trade at bargain prices. The same can be said for cryptocurrencies. Smart traders, on the other hand, understand that they will have to do some digging to find the needle in the haystack. Because there is no rush to start buying in a bear market, it is ideal for digging and spending time on research.

During the correction, there were probably a few cryptocurrencies that were unfairly knocked down by 70% or more. There is no need to rush back in and begin trading on a daily basis in order to earn small profits. A bear market is the ideal time to examine coins carefully in order to find that diamond in the rough.

Most investors believe that cryptocurrencies will not recover soon. As a result, they may begin shorting cryptocurrencies in order to profit. Margin trading allows investors to short altcoins. For example, a trader could borrow a portion of their current holdings and use that money to bet on the price of cryptocurrencies falling. Trading on margin, on the other hand, necessitates a level head and some self-control due to the inherent risks.

During this stage , even a experienced trader can’t do much except to follow up on trending news to find out what caused the bear and whether it is adviseable or justifiable to hold and wait for some good whale to start a high powered pump as it seems ,our whale friends could also be causing the dumping for already more than 3 days in a row , and they are opportunist and are reacting to the Russia / Ukraine high tensions , which also has affected the Stock exchange , and after hearing all the recent News about Russia intending to ban the Crypto , I find it quite difficult to believe as Russia Love Money and might be just hearing out to the whale calls .

Nobody Likes War , and Ukraine issue is actually a NATO’s issue, The U.S is just shouting and will ask the Nato Boys to stand in line, if they really start fighting. The U.S has pointed, US and their Allies most probably getting their good friend ,Germany and France to start the Ball . The US itself has it bundle of problems, and the New Administration knows very well , Ukraine issue should not be part of USA’s problems for Now .

So the only worry is when Fed goes to meeting on the 28th Jan . if they do annouce some stringent control on cryptocurrency trading , whereas ,all others issue might not relate to crytocurrecnies turning up bull again when it decide to break up again

During this period , some investor want to avoid the bear market ( as it can drag on for weeks ) , so staking is a good option to consider . Here are some of the primary benefits of staking.

-It does not necessitate a large amount of electricity (no more than a computer that runs Microsoft Word).

-It does not necessitate the use of a high-end computer.

-It is not usually necessary for the user to have extensive knowledge of blockchain technology.

-It generates a passive income.

-Except for putting the tokens into a wallet or smart contract, which is usually a quick and painless process, it does not require any work.

The primary disadvantage of staking is that it requires the user to already have tokens in order to create tokens. There is sometimes a minimum amount, and depending on the project, newcomers may be priced out. Staking has arguably grown in popularity because it allows crypto holders to earn significantly higher APYs than traditional savings accounts or money market fundsand almost every borad provide staking option , some will have full fledge option, to a wider range of coins, whereas others limited to only a few.

Is it worthwhile? It’s entirely up to you to decide, because there are risks involved. Let’s look at some of the risks and then you decide whether it’s worth it or not… it’s entirely up to you.

The most significant risk that investors face when staking cryptocurrency is the possibility of a negative price movement in the asset(s) they are staking.

If, for example, you earn 15% APY on an asset but it loses 50% of its value over the course of the year, you will still have made a loss.

Crypto investors must therefore exercise caution when deciding which assets to stake and should avoid selecting a staking asset solely based on APY figures

Risk of Liquidity

Another risk factor to consider is the liquidity — or illiquidity — of the asset on which you are betting.

If you are staking a micro-cap altcoin with little liquidity on exchanges, it may be difficult to sell your asset or convert your staking returns into bitcoin or stablecoins.

Liquid assets with high trading volumes can be staked on exchanges to reduce liquidity risk.

Lockdown Periods

Some stakable assets have locked periods in which you are unable to access your staked assets. Tron and Cosmos are two such examples.

If the price of your staked asset falls significantly and you are unable to unstake it, your overall returns will suffer.

Staking assets without a lockup period is one way to reduce lockup risk.

Duration of Rewards

Some staking assets, like lockup periods, do not pay out staking rewards on a daily basis. As a result, stakers must wait for their rewards.

If you “HODL” and stake for the entire year, this should have no effect on your APY. However, it will shorten the amount of time you have to reinvest your staking rewards in order to earn a higher yield (either by staking or by deploying assets in DeFi protocols).Investors can choose to stake assets that pay daily staking rewards to mitigate the negative effects of long reward durations on their overall crypto investment returns.

Validator node

Running a validator node to stake a cryptocurrency requires technical expertise to ensure that the staking process runs smoothly. To maximize staking returns, nodes must be completely operational at all times.

Furthermore, if a validator node (inadvertently) misbehaves, you may incur penalties that reduce your overall staking returns. In the worst-case scenario, validators’ stakes could be “slashed,” resulting in the loss of a portion of the staked tokens.

To reduce the risks associated with staking using your own validator node.

Validator Fees

There are costs associated with staking cryptocurrency, in addition to the risk of running a validator node or using a third-party service to stake.

Operating your own validator node incurs hardware and electricity costs, whereas staking with a third-party provider typically costs a few percentage points of the staking rewards.

Costs are something that crypto investors must keep an eye on in order to avoid eating too much into staking returns.

Theft or Loss

Finally, if you don’t pay attention to security, you run the risk of losing your wallet’s private keys or having your funds stolen.

Whether you are staking or simply “HODLing” your digital assets, backing up your wallet and storing your private keys safely is critical for safe digital asset storage.

Furthermore, it is preferable to stake using apps in which you hold the private keys rather than custodial third-party staking platforms.

So, given these potential risks, is it worthwhile for you?