The crypto space is subject to massive volatility. If you have had a rough start by getting in at the peak, you could be left wondering “where lambo” ? “where moon” ?
In the meanwhile you can learn what to do in the crypto bear markets. The next rally may be a while away. I am not here to predict the market and say it’ll happen 2 days later or 2 years later. Laws can change, there will be a lot of FUD being pushed around. But we know it’s coming one way or another.
One strategy is just to #HODL your coin. Just forget about crypto, go take a nap or whatever, and come back when there is the next bull run. While this sounds dumb, it’s actually proven to be a very effective strategy. Let the dust settle, let the whales play out their games. As long as we don’t interact with our portfolio, we’re not subject to any loss. Loss if any will only be there if and when you decide to sell.
2. Move to POS
If you’re like me and want a shred of control over your future, you can switch from your current holdings to coins that offer Proof of Stake rewards. The idea is you join a stake pool like miners join a mining pool and you can get rewards just for holding the coins. By the time the next bull market arrives, you might have just increased the number of coins you own and that way be in much better profits. This is by no means guaranteed returns because the price of the coin you’re holding may go down also, but at the same time, it does give you control on what you want to do with your staking rewards.
Staking rewards, what are they ?
Proof of stake basically means you get some new coins just for holding some coins in your wallet. How many new coins you is proportional to how many coins you already have in your wallet. Popular currencies you can stake are BNB, ADA, CAKE, TRX. Check stakingrewards for a full list. While staking BNB, TRX is quite straightforward in trust wallet, CAKE can be more complicated. We will cover it in a future post.
Suppose you stake BNB which is about 23% APR, you should be doubling the amount of coins you have in roughly 3.1 Years. That means if the next bull run is 3 years from now, you can participate with about double the amount of coins !
Let’s say 1BNB = 300$ for example sake. As i mentioned before, you now have control over how you want to spend the extra 1 BNB that you receive over the next year 3.1 years. You may choose to buy real world assets like stocks with the profits you’re making just by staking your coins, not disinvesting your crypto capital at all. Bitcoin or Doge cannot do this for you.
Hmm maybe, but not convinced yet ?
Some coins like CAKE offer upto 130% APR. That means the math we did before completely changes. 130% APR will mean a doubling rate of 0.55 years, this means you double your coins twice a year. Let’s say you buy CAKE of 100$, assuming at 15USD/CAKE, that would be 6.66 CAKE. If you stake all of it, you should have 6.66 * 2 * 2 ≈ 26.6 coins by the end of the year.
So we have now made insane gains in the number of coins we hold, but how does that convert to $ value ?
If Value of CAKE remains same 🤷🏼♂️:
your portfolio value should be at 15 * 26.6 = 397$
If Value of CAKE decreases 50% – bear market 🐻📉 :
your portfolio value should be at (15 * 0.5) * 26.6 = 198.75$
If Value of CAKE increases 50% – bull market 🐂📈:
your portfolio value should be at (15 * 1.5) * 26.5 = 596$ 🚀 🌕
Ok so now When is a good time to switch ?
We cover this topic in a good amount of detail in this post. Take advantage of this free tool c2cratio.com and figure out the best time to switch your current holdings to CAKE or even BNB.
So as you see, you’re actually shielded decently well by market volatility simply based on the fact that the staking rewards are so high. There are risks with this approach however, CAKE is based on Binance Smart Chain and in case binance goes insolvent, your investment value will become 0. But this is unlikely to happen. CAKE can be subjected to a new form of smart contract hack / attack, and that could potentially rob you of your cake. Always do your own research before investing. But this does provide an alternate way to survive even a bear market while secretly compounding on the amount of cryptos you hold throughout the time.
The plus side is, the Extra rewards have no lock-in period and can be cashed out regularly to invest in real world assets like stocks or you may leave it in crypto space to further increase your growth. I would however advice to regularly take out profits and put them in real world assets so you don’t lose everything if a major attack does happen someday.
Cheers and happy investing 🚀