What is Downtrend?
The downtrend is the process by which the price of assets in a market tends to fall, as shown by a price chart. In which the newly formed bottoms are required to be lower than the old ones, the new top must be lower than the old one. This shows that the sell-side sells in the market more than the buy-side.
In fact, over the past ten years, the crypto market has experienced a lot of sharp falls that unexpectedly kept investors from making a comeback. It must be expected for Altcoin to divide five by 10. Even BTC – the largest coin in terms of market capitalization – used to split 2 in just one day. The bearish trend ends when prices do not continue to create new bottoms and selling forces weaken.
Downtrends are of non-constant duration and may vary depending on various factors. Based on the price history, many say that the Crypto market downtrends once every four years, and Downtrends can take place over several months or 1 to 2 years.
Top 4 ways to earn during Downtrend
1. Margin/Futures (Short Selling)
Those of you in the Margin community it’s probably no stranger to the Margin/Futures trading approach. More specifically, at this stage is Short Selling.
Short selling is a trading strategy executed when you think a coin shows signs of falling sharply, selling first and buying later. This is the opposite of buying a coin and hoping its price will rise.
Take the practical example: The Bitcoin price is currently $30,000, and you think Bitcoin will go down to $28,000. So you borrow money from the broker and go short on Bitcoin for $30,000. Then, when Bitcoin drops to $28,000, you will buy back 1 Bitcoin and profit from the spread.
Margin/Futures allows traders to use high leverage, so the risk will be relatively high, leading to account fire. This requires traders to be knowledgeable and more or less knowledgeable about technical analysis.
2. Switch to a passive income source
You have another option if you don’t feel confident enough to invest or trade short-term trends, and it’s investing in platforms that can generate passive income. To do this, there are two forms for brothers to try:
- Crypto Lending: Crypto Lending. This way, the brother will take his assets to lend on popular exchanges or through providers such as Celsius or Aave. Alternatively, he can lend his cryptocurrency to another user and receive regular interest.
- Crypto Staking: Deposit Cryptocurrencies. You can invest in Proof-of-Stake (PoS) coins and lock your assets on the network to receive a staking reward. While the community awaits ETH’s imminent move to PoS, many other coins have supported staking rewards, such as EOS, ATOM, and DASH. However, when it comes to Staking rewards, each currency will have different yields. At first glance, the deposit bonus seems very attractive in terms of interest rates, but there are risks that you need to consider, especially when the market is very volatile, which can cause slippage. Moreover, when new currencies are minted, their supply is diluted, resulting in inflation, affecting the actual profit you receive.
In the downtrend market, projects will inevitably fall into a state of boredom, with no incentive to work (because coins constantly fall). So, this is the stage of market cleansing, which helps us figure out what the builder project is a scammer.
During this period, there will be airdrops from good projects. In these downtrends, we should do airdrop because there is less competition when many people leave the market. When the project returns the token to the wallet, you should hold and wait for the uptrend season.
It is important to note that it costs little or no. Limit participation in projects that have to invest too much money
4. DCA after BTC dump
Usually, when BTC dump is substantial, from 20 to 40% will be the accrual period. At that time, there will be many Altcoins going up again. You can split your capital to surf at this stage. The bottom line is to find another opportunity when you profit 20 to 30% from these Altcoins.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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