Bitcoin trading has evolved from being a hobby for enthusiasts to becoming one of the most popular ways to make money, which makes sense since it has much lower barriers to entry compared to traditional banking. Ease of access doesn’t guarantee ease of trading though, as we can see during these times of bear markets.
What is a bear market?
In simple terms, a bear market describes situations where Bitcoin’s value drops and stays low for a significant amount of time. It’s around these times that people will tend to sell what they have to at least get something back. The result then is heavy losses for those who sold or a worrisome time for those who held on.
If you’ve been wondering how to make money from Bitcoin during these bear markets, you might have noticed how these usually follow times when Bitcoin’s value reaches a good price.
5 ways to earn during bear markets
It’ll be hard to predict when the next one might hit but it goes to show that there are moments in the Bitcoin space that just seems to repeat, which brings us to our point—it’s completely possible to capitalize on bear markets so set up your Bitcoin wallet and read on through.
Don’t panic sell
Once you realize that you’re in a bear market it’s important to remember to keep a calm head and avoid panic selling. It’s understandable why you might think that that’s the best way forward but it will result in losses you’ll have difficulty recovering.
The best thing you can do is to start by doing your own research. Get a handle on what’s happening and don’t let panic decide for you.
Use cost averaging techniques
One great way to keep your investment safe is by keeping it moving. One way to minimize your losses and maximize potential gains is by following cost averaging techniques.
This is when instead of investing all of your money into one purchase you distribute it in increments over time. Say you had $1000 USD for investing; split that up into $200 USD and invest that in BTC over a span of a few months or even a year.
What would improve this technique is if you could combine it with the available tools on the Internet like indicators. Let’s talk about those next.
With the rise of the Internet, we are now seeing the availability of tools that allow BTC traders to make informed decisions rather than basing their decisions on impressions of the market. It might take some time to learn how to use these indicators but it might prove to be worth your while.
A popular way to go about this is to use the Relative Strength Index indicator or RSI. This indicator can help you figure out when to buy or sell with two signals; overbought or oversold. Overbought means that people have bought too much and have overvalued the coin signaling an upcoming drop. Alternatively, oversold would signal an undervaluation of the coin with the possibility of an upward trend in the near future.
Consider staking your BTC
When we stake our BTC, we are locking it in and using it to validate transactions on the blockchain network. In what is also known as a Proof-of-Stake (PoS) consensus method, you’re declaring to the network that you are willing to keep your connection for validating network transactions.
What you get are benefits offered by whichever platform you choose. Some might offer their own tokens while others might offer you interest on your staked BTC.
Keep in mind that staking will have periods and fees associated with each platform. Staking periods could be flexible but some platforms have set parameters. Similarly, each platform will have different fees for staking and un-staking your BTC.
Focus on long-term investments
At this point, it’s important that you set your mental strategy to reflect what’s happening in the market. Think more about the long-term rather than the short—as you’ve probably seen, you’re not likely to recover your initial investment any time soon.
Thinking in the long-term will help you build patience. Do what you can as per the previous points but do it all for the sake of improving your potential earnings in the long run.
Making informed decisions
What we’re basically saying is that while there may be times when the market makes us worry there’s always a way to think your way through them. Bear markets have scared many traders but BTC has always come back to prove its doubters wrong.
The issue now is knowing what to do when facing these situations. What’s good is to have a strategy, something you can rely on. Of course, this means you’ll have to plan ahead but when it comes to BTC trading, making informed decisions is the best way to move forward.
*The content of this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
Chris Mcdonald has been the lead news writer at complete connection. His passion for helping people in all aspects of online marketing flows through in the expert industry coverage he provides. Chris is also an author of tech blog Area19delegate. He likes spending his time with family, studying martial arts and plucking fat bass guitar strings.