Community Perspective: How to Invest in Cryptocurrency with Low Risk in a Bear Market
With 220,000 followers on Twitter, Lady of Crypto shares her insights and investment tips on the crypto market based on her trading experience. Here is her investment approach during the current bear market. Note: This content is for reference only.
When done correctly, a bear market is the best time to increase your net assets. This is not about "how to survive in a bear market," but a guide on "how to make money from a bear market."
Bear markets are the best-case scenario for your net worth.
If you stick around and play it right.
This isn't a "survive the bear market" thread. It's a step-by-step guide to making fu money from the bear market.
Like and retweet if you find this useful.
🧵 👇
1/12 pic.twitter.com/DB8GqSzrxW
— Lady of Crypto (@LadyofCrypto1) July 12, 2022
Table of Contents
Patience is Key
SOL, AXS, LUNA, SAND, and MATIC are among the few cryptocurrencies that have seen returns of over 150 times from 2020 to 2021. All of these tokens saw their value surge during a bear market and only started to rise after Bitcoin broke its previous all-time high.
This means investors could have gained a return of 150 times without having to buy in during the unstable bear market, but instead waiting for Bitcoin to reach new highs.
Stablecoin Staking
Therefore, based on the above, if you do not intend to use stablecoins to purchase altcoins in the near future, it is recommended to put them in a staking pool. Every dollar earned from staking could potentially increase 150 times next time, meaning accumulating chips.
The author shares the following stablecoin staking strategy:
- Hold secure stable assets like USDC.
- Diversify staking risks across at least five different protocols.
- Redeem immediately if any negative news arises from the protocol, such as UST unpegging.
Research
Analyze the key trends you believe will drive the next bull market cycle. For example, in 2020, the author extensively researched GameFi and received significant returns. The author shares the main investment areas expected for the next cycle:
- Layer 1 / Layer 2
- X to Earn games/learning/watching/moving
- IDO platforms
- Privacy
Understand which areas you are sufficiently interested in and split assets in that area into two parts: one part in "verified and low-risk" digital assets in that area, such as ETH or SOL, and the other part in secure assets like stablecoins to be able to invest in new projects in that area in the late bear market.
- Low-risk projects: Assets you consider safe.
- High-risk projects: Can either go to 0 or 1000 times.
Below is an example of asset allocation showing the percentage distribution of low-risk and high-risk investments in each area you research and invest in. Note that this example is for the late bear market period, not now! Author's note: It's not yet the late bear market, so keep more stablecoins for staking.
The author shares the lowest-risk investments in the areas they believe in. Note: This is not investment advice.
- Layer 1 / Layer 2: ETH, SOL, AVAX, MATIC, METIS.
- X to Earn games/learning/watching/moving: PYR.
- IDO platforms: DAO, but author has not bought yet.
- Privacy: ROSE, AZERO.
What If You Don't Have Money?
Don't worry. Keep working and accumulate funds that you can afford to lose. You have a few months to prepare.
When Should You Invest?
The aforementioned low-risk investment strategies should be gradually implemented. The author started increasing positions from 6/14, with the current investment funds being less than 10% of the total funds, and expects it may not reach 30% even after twelve months.
Advanced Strategies
In the current bear market trend: when the price stabilizes at support levels, the author starts accumulating positions and takes partial profits when it rises by around 20% to 50%. For example, buying SOL at $27 and taking profits between 20% and 50%, then reinvesting when the price returns to $27 or lower. However, the author emphasizes that these methods may not be suitable for everyone.