If the crypto winter has placed your altcoin trading on ice, you were never a trader to begin with. Any fool can make money in a bull market, but bear markets are where knowledge is gained and future profits are carved.
Bear Markets Are Best Markets
There’s an assumption, among less experienced traders, that once your altbags are underwater, there’s nothing to do but wait it out. Take up fishing; join a gym; kill some time until more favorable conditions return. Not so. Following the giddy euphoria of daily all-time highs, level-headedness returns. Clear thinking prevails when hype has been hustled out of town. While some of the following strategies call for experience, the majority require little more than a willingness to study. Put in the hours now and when the running of the bulls resumes, you’ll be at the head of the pack.
Bitcoin doesn’t need to move up for you to profit – it just needs to move. Any which way is good provided you can identify the trend. The shorter the time frame, the greater the risk of getting liquidated – but the quicker the payday. The likes of Bitmex and Okex offer futures as well as perpetual contracts that are funded every eight hours. Beware of futures trading altcoins such as ripple and litecoin, because bitcoin chooses the tune the rest of the market moves to.
Give Margin Trading a Go
Margin trading is basically futures on steroids. Crank up that leverage all the way to 100x if you’re feeling foolhardy or supremely confident. The rewards for mastering margin trading are huge: Bitmex’s top two traders have amassed 7,000 BTC between them. They’re exceptions though. In conventional cryptocurrency trading, you get to keep the coin, even if its BTC value sinks. With margin trading, the margin for error becomes wafer thin the higher you crank that leverage, and the penalty for failure is liquidation.
Brush Up on Technical Analysis
If there’s one thing a bear market’s good for, it’s homework. While the benefits bestowed by technical analysis (TA) can be debated, no trader in their right mind would consider margin or futures trading without a basic understanding of it. Start with the basics such as moving averages and RSI, and then move on to ichimoku, fibonacci, and all the rest. Bitmex’ testnet is your playground for experimenting with indicators without getting rekt.
Most crypto traders have lives away from the soft glow of dual Tradingview monitors, and it’s unlikely you’ll have the time and skill to become a TA pro. Getting a feel for the basics will help you time your entries and exits better, however, and when the markets turn green, you’ll stand a better chance of selling near the top instead of falling for the hodl meme and suffering another 70% retracement.
Scalp Your Way to Profit
When the markets are capricious, there’s money to be made in creaming profits off small price movements. Scalping is a smash-and-grab job that requires little other than free time and a willingness to grind it out through frequent buying and selling. Like all trading strategies, scalping is not without its risks. All it takes is one major fail for your hard day’s haul to be undone.
Dig for Hidden Gems
Everything’s cheap in a bear market, but just because a coin’s cheap doesn’t mean it has value. Thanks to the low volumes and depressed prices, there’s no need to rush into trades. Instead, take your time to research projects that are undervalued and have the potential to 10x or greater when the market rebounds. Examining coins that have dropped 70% or more from their all-time high will reveal, amidst all the dross, a handful that have been unfairly hammered.
Most crypto traders are impatient, and sometimes a coin is languishing simply because the crowd has lost interest while the platform is under development. Monitor the social feeds and Github repositories of projects you like to learn when their mainnet is due to launch.
Play ICO Detective
Market shakeouts are great for separating the wheat from the chaff, especially when it comes to ICOs. In early January, any piece of vaporware was guaranteed to hit its cap. With many tokens trading at a loss the moment they hit an exchange, investors now have to be savvy. Instead of FOMOing into some 5/10 crowdsale that’s ending tomorrow, save your ether and put your time into investigating projects whose sale is still months away. Read their technical documentation, Google the team, and pore over their token use cases. Just as experienced traders can spot a bear trap when they see one, experienced ICO researchers can spot a winner long before the crowds have caught on.
Get a Job
If crypto trading’s stopped paying the bills, perhaps it’s time you got a job. No, not a McJob – a crypto job. There are still loads of companies hiring because they, like the bulk of the crypto community, are confident that these bearish conditions are only temporary. The best thing about working in crypto, even if the job’s not particularly glamorous, is you’re likely to get paid in crypto. Then, when bulls come out to play again – whaddya know – suddenly that cryptocurrency you’ve earned is worth a whole lot.
What’s your bear market trading strategy? Let us know in the comments section below.
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Author: Kai Sedgwick