Bear markets aren’t fun. Nobody likes to see massive devaluations in their crypto portfolio’s day after day. Unless you cashed out at the peak of the market in January, you probably have experienced well over 50% decline in your portfolio value. For many, this is enough to fold and quit. We are witnessing most people who couldn’t afford to be in the market capitulate and move on, discounting crypto as a fad and blaming their losses on some unknown existential force. We look on this as an opportunity to create potentially life changing positions. If you’re still here, stay positive, and use this bear trend to your advantage. In a quick list we will give you some tips on how to stay profitable and maintain your crypto portfolio even when things look bleak.
- Always keep at least 50% of your crypto portfolio in BTC. Whether you like it or not, Bitcoin is still the king in this market. Every alt coin is pegged to bitcoin price and their values often fluctuate along with bitcoin. Maintaining 50% in BTC ensures you are not overextended in alts and always give you room to average down on a good investment. You don’t want to run out of chips.
- Bear markets tend to be extra volatile. We saw a massive sell off last week that held for 2 days, then things spiked back up paring most of those losses and and turning many altcoins green. In short, bear markets still have positive days. Since the trend is still down, use those “green” days to your advantage and take a few percent of your portfolio into USDT, or TUSD. This will ensure you lock in some profits, while allowing you much more flexibility if things continue to trend downward.
- Play the downside by considering low-leveraged short opportunities. This is a concept that is NOT for everyone, and should only be considered by individuals with ample capital to back up their trades, and at least some TA knowledge. Only being able to go long is not a very agile strategy. Maybe in December and January of last year that worked, but more often than not, coins are moving down. Shorting allows you to still be profitable on the downside. If you do decide to short, never use too much leverage. We generally stick within the 2-5X range so that we can avoid liquidation on an unexpected pump. Often times, simply checking the number of shorts or longs on a specific contract on tradingview.com can give a crypto trader great insight into the direction a coin may be moving on the short term. I think this goes without saying, but leveraged trading is extremely risky and without proper risk management it’s a losing game. Always deploy stop losses where you feel comfortable, and NEVER use too much leverage.
- Remember, Bitcoin is down 75% from its ATH. This sucks, because it has resulted in roughly 600 Billion USD being wiped from the entire market. While the paper losses are staggering and your crypto portfolio’s USD value might look terrible, consider switching over to bitcoin value for the bear market. If you aren’t over extended into alts, you might be pleasantly surprised. If it’s not possible to actually turn a profit in USD in this market, focus on growing that Bitcoin value as much as possible. It’s important to remember the long term trend of bitcoin and stop zooming in on the short time frame charts. Stacking as much bitcoin now could not only be extremely profitable in the coming years, it could allow you to spread your chips out during a bull run in the future to grow your stash. In short, bear trends are a blessing in disguise which allow traders to accumulate more bitcoin at a discount. It’s much easier to accumulate bitcoin when its 6K versus when its 20K or more. While this sounds quite obvious, most traders are hyper focused on USD value, forgetting that this entire market is valued in BTC, not USD.
- Stay off of Twitter as much as possible. This one may sound counterintuitive, but it has worked wonders for my account value. Twitter is full of thousands of individuals, with their own personal biases, coupled with an immense amount of greed. This is a recipe for disaster. From my experience, the most profitable trades I have been involved in have were from my own decisions, and not tag along trade ideas from an “OG”. Twitter is hectic and negative. It often makes traders second guess themselves and panic sell good positions. Or, it convinces you to enter a position at a bad time, following the crowd when you should be doing the opposite. I am saying this because I have experienced these emotions. I have fomo’d into positions because they were being extra hyped on Twitter, and I have fomo’d out of positions because of negativity on Twitter. In all instances Twitter during a bear market is a dangerous place. This is not to say don’t use Twitter at all, there are often great ideas there and it’s a good place to stay up to date on news, although take everything you see with a grain of salt.
- Try to leave emotions out of the equation as much as possible. This is something that I have been working on avidly since I began trading in crypto’s over two years ago. I still fall prey to my emotions. There are some larger forces in this market that tend to use low liquidity to their advantage, often swinging prices wildly for short periods of time. If you are glued to a computer screen all the time, you will witness these events and panic. Don’t sell into a huge red candle and don’t buy into the “Christmas trees” as we call them. Wait it out, things will settle down and if you still want to change your positions, the opportunity will arise. In short, avoid trading during ultra volatile periods, because that’s when you get the most REKT.
- Take breaks from the charts. This advice goes hand in hand with emotions. If you are constantly charting you will bare witness to all of the insane volatility and your emotions will likely take over. This has happened to me countless times and has ultimately costed me thousands of dollars and multiple BTC. This is not to say be lazy, but get some exercise, go outside, write down your thoughts, take notes, Journal your trades, play some Fortnite with friends. Don’t let your mind constantly gravitate to crypto and short term price movements, because you will inevitably make emotional decisions.
- Consider holding some percent of your crypto portfolio in BNB. Binance coin has been the best performing altcoin of 2018, and it has always provided a great hedge even when everything is trending downwards. Although recently BNB has not been performing well, we are extremely bullish on the future of BNB. If you want to know more about BNB, read our more thorough analysis here.
- Hold a portion of your crypto portfolio in USDT to play the volatility on Binance altcoins. Again, trading is not for everyone and if you don’t have any TA knowledge, this concept is not for you. If you have patience and a decent understanding of TA, playing the volatility of Binance alts is a great way to passively grow your account even during a bear trend. The best way to get a grasp on the movement of these altcoins is to journal the trends. Take note of bitcoin price everyday along with 5-6 altcoins that you are interesting in trading. If you have journaled the price for a long enough time period you might start to get a grasp of the trend many of these coins are following. Don’t jump into trades trying to make a quick buck, let the trend pan itself out and let that trade come to you. There is not a trade to be made everyday, and swing trading alts requires a higher degree of focus and maintenance than simply going long on Binance.
- Lastly, If you are still here, you are in the right place. If you have been completely rekt, take this trend as an opportunity to learn from your mistakes and improve on them for the next potential bull market. Re-evaluate what your goals are in this market. Are you trying to make a quick buck and return to USD? Or are you trying to grow that Bitcoin value to create a potential windfall for you future self. Position yourself for every eventuality and never go all in on any altcoins. Based on the long term trend of Bitcoin, this bear market is nowhere near over. It has been about nine months now and we could be in for another 6-9 months. Barring the unlikely early acceptance of an ETF, this bear market is not yet over. Don’t get too high on “hopium” and stay realistic. The entire market 20X’d in 2017, its unrealistic to think things weren’t going to crash and its equally unrealistic to think we will be returning to ATH anytime soon. With that being said, we still believe in the long term vision of Bitcoin and cryptocurrency and we believe there will be another bull trend. There is no telling when this will happen, so for now we are buckled down tight, and preparing ourselves to be profitable while growing our passive income along the way.
Full disclosure: This is NOT investment advice and the contents of this article are formulated from my own opinions. Please use your own discretion. We are LONG BTC and BNB ATM.