This bear market is nothing out of the norm if you’re a seasoned crypto investor. You dealt with similar periods before, and you will most likely do it again in the future.
The cryptocurrency market is in the middle of winter, during which bitcoin price usd and all other digital assets have depreciated more than 70% of their all-time highs. However, despite your experience, the bear market is challenging for everyone because market volatility can trick you into making bad decisions.
But the industry still offers countless opportunities to earn passive income, even during the bear phase – if you know where to look. Cryptocurrencies like Bitcoin and Ethereum have allowed people to boost their passive income without putting in too much effort. So, you don’t have to take risks you’re not comfortable with or spend all your time analysing chunks of information. The concept of earning a passive income isn’t new, but digital currencies add new dimensions to it.
What Is The Crypto Bear Market?
In traditional financial markets, the bear market is when asset prices fall by more than 20% of their previous highs. In the crypto sector, the bear market is a period when digital assets prices and market confidence drop.
How long does the bear market last? Bear markets don’t have set periods, but specialists agree that the average bear phase lasts at least three months. The present one started in November 2021, and it shows no signs of slackening. So how long will it last?
During bear markets, all assets drop in value, offering investors the chance to buy at bargain prices. These periods are defined by pessimism and low investor confidence. Crypto traders usually ignore all positive news and sell all their assets during bear markets because the assets’ drop in value scares them. The sector went through three bear markets since the inception of the first digital currency, Bitcoin, and even if the assets’ prices dropped severely every time, they spiked to new highs when the market bounced back.
Can investors predict what happens in a bear market? Experts think it’s impossible to make predictions in a market as volatile as the crypto one, and no one can anticipate the rise of one until assets lose at least 5% of their value and show no signs of recovering.
Can You Survive A Crypto Bear Market?
Considering the present crypto market conditions and continued volatility of the sector, it’s understandable that you feel overwhelmed when thinking about investing in digital assets. It’s challenging to make logical decisions or follow your strategies when your portfolio and income are taking hit after hit. At the beginning of the bear market, all assets begin to fall even if the news is positive and reports further development expected to keep the sector afloat.
The secret to surviving this period is to focus on the crypto projects’ fundamentals and have a long-term vision rather than knuckling down on the assets’ prices. Even if the average bear market ends in higher values, numerous portfolios that suffered damage during this period take longer to recover. Unfortunately, some never recover. Bear markets are good examples of how important it is to preserve your capital and invest in several classes of assets.
Crypto experts also recommend investors be greedy during bear markets because the bear market provides countless opportunities to those who aren’t afraid to take risks.
Ways To Survive The Crypto Bear Market And Make A Passive Income
You might find it difficult to locate digital assets that experience no damage due to the market downturn, but you can still employ some strategies to generate passive income.
Staking
If you’re an investor, you know that holding tokens to gain passive income is paramount during bear markets. Staking is an effective strategy to earn income and boost your position in a crypto project. Staking is a method that implies locking your assets on a platform to earn interest. The average platform offers two solutions: fixed staking and flexible staking. Fixed staking requires you to commit to the cryptocurrencies for a determined period. Flexible staking allows you to withdraw your funds at any time.
Make sure to choose a centralised platform like Binance for staking cryptocurrencies.
Trading
Trading cryptocurrencies when the market is in the bear phase could allow you to buy assets at discounted prices and sell them for higher values when the market bounces back. Getting passive income via trading can help you offset losses during a crypto winter. This strategy requires much effort and research because it’s more difficult to find profitable trades that allow you to capitalise on market conditions. You can trade digital currencies on centralised exchange platforms or social trading platforms. However, ensure you develop strategies that match the bear market’s needs.
Mining
Mining is another successful way to gain profit during bear markets. The rewards are lower than in bull markets, but it’s still a profitable endeavour. You can mine cryptocurrencies on your own or join a mining pool. If you’re a beginner, it might be more challenging because you need to solve the next block by yourself. Mining pools are more effective because they find solutions faster. Suppose you decide to join one; you’ll get a reward based on your hashing power contribution.
Affiliate Marketing
Affiliate marketing is another form of generating passive income during crypto winter periods. It enables you to gain income by promoting a brand or product. When someone purchases cryptocurrency as a result of your advertising, you get a reward. You can engage in affiliate marketing via several platforms, email lists, blogs, or social media networks.
Investors rely on affiliate marketing to make money during market downturns. Some projects pay the rewards in their native tokens or offer a commission rate for promoting them.
Final Words
Digital assets are unique financial instruments that enable you to take part in the distributed economy. Therefore they also offer the chance of earning passive income, as long as you’re willing to take some risks.