The crypto space has been in a bear market for some time now, and there’s no telling when it will bottom out. Things are even worse given the recent waves of scams, crashes, and exploits. And it’s now a time for the survival of the smartest.
While the Terra Classic ($LUNA) crash played a pivotal role in propelling us into the bear market, it was only the first of many dominoes. Following suit were the Celsius tribulation and Harmony’s ($ONE) bridge exploited where the hackers made a run after stealing $100 million worth of crypto.
Many investors have lost a lot of money, and some have even given up on crypto entirely. But all is not lost. The bear market, albeit unforgiving, tends to weed out overrated projects that add little to no real value.
So, what do investors do to protect themselves and their investments in a bear market?
1. Reduce Risk
During a bear market, it’s important to reduce the risk for easier survival. This means selling off high-risk assets, such as exotic altcoins, and moving funds out of centralized exchanges. Memecoins, too, are very risky assets and should be avoided.
The volatility that accompanies the bear market also urges investors to profit off the price swings by taking leverage. But again, this is a high-risk high reward play, which is not the best move forward for inexperienced investors and those with low capital burning capacity.
Hence, diversifying the portfolio with large-cap cryptocurrencies like BTC and ETH is a better approach to getting through the bear market.
2. Free NFT Mints
In a bear market, every little bit helps in the survival of your portfolio.
While most promising projects launch with a mint price, there are a few that distribute their tokens for free. Collectors only have to pay the gas fees. And if the project is on layer-2 blockchains or layer-1 blockchains like Solana and Near, even gas is not a concern.
While the likelihood of free-to-mint projects making it big cannot be ascertained, it is a relatively less risky move and can more than makeup for the losses that an investor would have accrued during the bear market.
For instance, Goblintown WTF is an NFT project that was originally free to mint. Shortly after, someone purchased one of those NFTs for 69.42 ETH or almost $130,000 at the time of the sale.
3. Play to Earn (P2E)
The Play-to-Earn (P2E) model is a way for players to earn in-game items or cryptocurrency by playing games and maximize their chances of survival. In a bear market, investors often look for ways to generate income without having to put their capital at risk. The P2E model presents an opportunity for just that.
One of the most awaited games in this genre is Otherside. A metaverse P2E game from the creators of one of the world’s largest PFP NFT projects, Bored Ape Yacht Club (BAYC). In Otherside, players will be able to earn $APE, an ERC-20 token that can be used to purchase in-game items or exchanged for other cryptocurrencies.
4. Move to Earn (M2E)
Move to Earn (M2E) is already emerging as a replacement for conventional fitness tracking apps.M2E offers crypto rewards to players for completing certain fitness goals.
Given the risks involved during a bear market, it is wise to adopt solutions like these that seamlessly integrate with the daily activities while growing the portfolio.
Airdrops can be a godsend for investors looking to acquire new tokens without having to put their capital at risk.
An airdrop is when a blockchain project or company distributes free tokens or cryptocurrency to its community. Usually, to be eligible for the airdrop, the investors just need to hold some of the project’s tokens in their wallet.
Companies use airdrops as marketing tools to generate hype around a project and increase its visibility. They are also used to distribute tokens to a project’s early supporters.
6. Dollar Cost Average (DCA)
Dollar-cost averaging is an investment strategy where an investor buys a fixed dollar amount of a particular asset on a regular schedule, regardless of the asset’s price. The goal is to buy at different price levels than to buy at one and take more risk. Investors often use DCA as a way to slowly enter the market, especially during a bear market.
Look on the Bright Side
The crypto bear market can be a tough time for investors, but it doesn’t have to be all doom and gloom. There are a number of strategies that investors can use to protect their portfolios and even generate income during a bear market.
By diversifying into different asset classes, such as NFTs and gaming, investors can reduce their overall risk while still participating in the crypto market. And by using strategies like DCA and airdrop claims, investors can minimize their losses and even acquire new tokens without putting their capital at risk.