How New Traders Can Profit From A Bear Market


5 mins read August 10, 2022

Some new traders think that the crypto bear market is a period when one finds it difficult to make a profit while trading cryptocurrencies. However, that is far from the truth. The truth is that even during a bear market, experienced traders know how to make consistent profits off the crypto market. 

It’s quite interesting that you can be busy making money while many cryptocurrencies are losing their market capitalization and value. Before this can happen to you, you will have to learn about the bear market and how you can make money during that period. 

Right here, we will explore together what the bear market is, and strategies you can apply to make a lot of money even during the market. 

What is a Bear Market? 

The basic bear market definition that every newbie crypto trader knows is that it is a period when most of the altcoins and bitcoin go down in value and can last for a while. The effects of a crypto bear market are highly visible, and not only does it affect the traders, but also crypto institutions and organizations are affected. 

A bear market is a prolonged period when more than twenty per cent of the cryptocurrencies in the market decline both in their market capitalization and value. One of the things that usually happens in a bear market is that newbie traders don't often notice how close a bear market is until it finally happens. Knowing what a bear market is will help you create effective crypto trading strategies and be cautious once the market starts to decline.

One of the significant differences between a bull market and bear market is that in the bull market, many cryptos will rise in value while the crypto bear market is filled with uncertainty. 

Ways New Traders Can Make Money From The Bear Market 

Going by the definition of a bear market, there are still chances that even within the uncertainty and red candles, you can still make a lot of money even as a newbie. Below are some crypto trading strategies that when you apply, you get a better chance of making a lot of money during a crypto bear market. 

Yield farming is an exciting and easy way for an amateur crypto trader to make money during any bear market. All you have to do is to lend some of your crypto assets to a decentralized finance platform where these assets are held in a liquidity pool. 

The breaking point here is that after some time, you will earn a higher value of what you invested in the Defi platform, which is usually the interest of the crypto asset you put in the liquidity pool. 

During the bull market vs the bear market, crypto staking is still one of the ways newbie crypto traders can make money during the uncertainties that follow the bear market. It is the process of earning some interest from the funds you locked up in the blockchain or blockchains for so long. 

Note that although it might sound similar to yield farming, they are totally different both in terms of operation and blockchain involved. Crypto staking majorly involves Proof-of-Stake (PoS) blockchain, which mainly uses the process and funds involved in staking to validate transactions on their protocols. 

Most crypto traders, both the new and the professional ones, make use of the dollar cost averaging during the bear market to make a lot of money. The processes involved during dollar-cost averaging are very simple; with time, a newbie can easily go through the process while making a lot of money. 

Even during a bull market vs bear market, dollar cost averaging remains one of the best ways to make money, and here is an explanation of how it works. It is an investment strategy whereby a crypto trader splits his capital into different pieces and then invests them from time to time at specific intervals. 

An illustration of this is that assuming a crypto trader has about $10,000 to spend during a bear or bull market, they break that capital into ten or more and then invest them one at a time for extended periods. This investment strategy should be adopted because it helps both newbie and old crypto traders not to lose much money assuming the market dips much further and then make more money assuming the market goes up in value. 

One of the things that a crypto bear market often reveals is those crypto projects that are built with real utility. Researching during the bear market and finding out those cryptocurrencies that stood the test of the bear market and investing in them is a sure way of surviving the bear market.

Note that even as you are investing in such solid projects, you shouldn't put all your money in only one of them, there is a need to diversify your investment portfolio. 

Your Trading Journey Begins

You can make money trading cryptocurrency irrespective of market conditions. The Crypto bear market is when most crypto enthusiasts see a lot of cryptocurrencies they believed and invested in go down in value. As a crypto trader, you must know what a bear market and the strategies you can apply to make money even during that period is. The following above, such as dollar cost averaging, yield farming, crypto staking, and many others, are some of the ways you can make money during the bear market as a new crypto trader. 

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