The 5 Best Strategies to Use in a Bear Market
All financial markets experience ups and downs. A sustained upturn is often referred to as a bull market, whereas a prolonged downturn is referred to as a bear market and both sets of conditions offer potentially lucrative opportunities. For example, falling markets providing lower asset prices.
The Definition of a Bear Market
A natural and inevitable part of any investment cycle, a bear market is defined as an extended decline in a financial market’s prices, leading to a pessimistic forecast with negative investor sentiment, where typically prices have fallen by at least 20%.
Able to last anywhere from a few months to a few years, a bear trend is going to come around, whichever market you invest in, but by choosing the right strategy you can seize the opportunity to provide a safe haven for your capital until prices start to climb again, or buy the dip and get hold of potentially great assets at a lower cost.
Strategy 1: Holding Stablecoins
One of the most popular strategies in a bear market is to take advantage of the relative stability offered by stablecoins.
Stablecoins are a type of cryptocurrency where the price is pegged to a to an exchange-traded commodity, FIAT money or a digital currency and they tend to be far less volatile than other coins. As a result, many investors turn to stablecoins during periods of high volatility, while they wait for the market to recover.
Here at ArbiSmart, we support a choice of stablecoins, including Tether (USDT), and USD Coin (USDC).
Strategy 2: Implementing Dollar Cost Averaging (DCA)
Dollar Cost Averaging, or DCA for short, refers to the strategy of investing small amounts, at regular intervals. You are reducing the impact of bear market volatility on large asset purchases, by making a number of purchases over time, waiting for prices to fall to a pre-set target.
With the ArbiSmart exchange, you can buy, sell, and exchange a huge selection of FIAT and crypto assets while benefiting from a low fee structure and unmatched rates.
Strategy 3: Diversifying Your Portfolio
One of the best ways to protect your capital in a bear market is by not placing all your eggs in one basket. This is always good advice as you will minimizing risk by spreading out your investments. However, it is particularly important to keep this in mind in times of extreme market uncertainty, since it is almost impossible to anticipate which currencies will bounce back quickest or enter a bull run as they recover.
Strategy 4: Opening an Interest-bearing Wallet
In a bear market, one of the most lucrative ways to earn a profit, without lifting a finger is with an interest-bearing wallet. In return for safely storing your funds you will receive a steady, consistent passive profit, and the interest rare that you receive on your capital will remain the same even if the market plummets. This offers an advantage over most other strategies in that it doesn’t require you invest time and energy researching market strategies, analyzing trends, watching price movements, or learning trading skills. It is low-risk and with the right wallet can be very rewarding.
The ArbiSmart interest-bearing wallet offers industry-high profits of up to 147% a year on a massive selection of traditional and digital currencies. It also offers total flexibility so that can have multiple balances in a range of currencies and enjoy complete control over the plan you choose and the amount of access it offers to your capital.
Capital can be stored interest-free and accessed 24/7, or it can be kept in a long-term savings plan for 2,3, or 5 years, generating higher interest the longer the lock on the funds. If you wish, you can choose to have your interest send to an available balance where it can be withdrawn any time. Alternatively, the interest can be locked in the savings balance alongside the funds on which it is being earned for a higher interest rate.
The amount of interest you make depends on your account level, which is decided based on the how much RBIS, our native token you own. To put it simply, the more RBIS you hold the higher your profits from savings balances in any supported currency.
It’s worth noting that if your savings balance is in RBIS, you will make three times higher interest but if you want to keep the balance in BTC or EUR, you can still boost your bottom line by just receiving the daily interest in RBIS.
These incentives for buying RBIS are increasing the demand for our native token. Also, as more people are locking RBIS in savings balances and taking it out of general circulation the limited supply will drop further. This process of demand outpacing supply is just one of the reasons analysts are projecting a rise to 48 times the current RBIS value by the end of 2022.
Strategy 5: Staking Capital
A potentially hugely profitable strategy that has continued to gain ground, even in a downturn, is yield farming. It enables funds to be locked for a given timeframe, generating steady passive gains, and it is considered a smart strategy in a bear market since the initial investment required to meet the staking threshold for certain digital assets will be lower.
Later this quarter, ArbiSmart will be introducing its own yield farming program, where you can be rewarded for staking capital in liquidity pools with up to 190,000% APY, as well as 0.3% of the fees on each trade.
In the second half of 2022, ArbiSmart is also introducing its own NFT marketplace plus a unique collection thousands digital artworks. A professional-grade new cryptocurrency exchange is also being launched as well as a play-to-earn gaming metaverse. All these new utilities will require use of the RBIS token. They will be interlinked so use of one service will ensure higher returns when using another utility in the ArbiSmart ecosystem. For example, if you hold an NFT from the marketplace you could boost your APY in the yield farming program. All these developments mean higher demand for the RBIS token, which will lead to exceptional capital gains from the rising token price.
As we can see, even in a bear market, the RBIS price is set to keep climbing, and this combined with the profits from individual services like the yield farming program and the interest-bearing wallet ensure the ArbiSmart ecosystem offers an array of revenue-generating opportunities, whichever direction the market is moving.
Even in a downturn there is money to be made. Don’t just let your money sit doing nothing until the market bounces back, make it work for you! To find out about a variety of other strategies and crypto market trends, browse the ArbiSmart blog, or check out our website to learn more about the ArbiSmart wallet and crypto ecosystem.