What investment strategies can protect investors during the bear market?

  • Hodling, staking, and yield farming are some of the investment strategies to protect oneself in the bear market. 
  • Although protective, these strategies are not 100 percent safe as they also pose some risks. 

The entire crypto market is in the red and is currently at a market capitalization of $894 billion. The current crypto market condition started after the top crypto asset, Bitcoin, and others reached their record highs in November 2021. Since last year’s all-time highs, crypto prices have plummeted, with BTC losing more than 50 percent of its value. 

The heat is on, and investors are in fear. While many are taking a break from investing in the highly uncertain crypto market, some remain persistent. However, it is important for crypto investors who are not taking time off to possess special skills and investment strategies to survive through this trying time. Different strokes for different folks, they say. 

Cautious investment strategies to consider in a crypto bear market

The first lesson a crypto investor should learn in the current crypto bear market is to hodl. This is simply a buy-and-hold investment scheme. Although, this means that the tokens will depreciate as the value of the digital assets fall. Hodlers are long-term investors and stand a chance to enjoy the benefit of long-term investments. Software crypto wallets Metamask and Trustwallet are two of the best options to safeguard one’s cryptocurrencies.

As a crypto hodler, one can lock up the digital assets on mostly a Proof-of-Stake platform to earn staking rewards. Crypto owners stake their holdings by putting the crypt to work to earn rewards. With a lot of crypto scams feasting on investors. Pancakeswap or Nomiswap are recommendable platforms to explore.

Yield farming is one of the investment strategies many utilize to avoid selling their cryptocurrencies in a bear market. Users deposit a token pair into a liquidity pool and accrue rewards. Stablecoin pairs are better options to consider in a crumbling market, as they are immune to sudden price declines. At the same time, some pairs pay more than others, depending on the stablecoins and the platform. Notably, stablecoins are not entirely safe from risks. An example is the recent and shocking Terra fall.  

Investors sometimes short sell in a bear market. However, short selling is a trading system that requires skills and expertise. In short selling, investors borrow securities, sell them in the open market, and expect to repurchase them at a lesser price after some time. Although this strategy is profitable, it is time-consuming.