It’s A Given
Even the most bullish and groundbreaking market will experience corrections. This is the reality that so often escapes consideration. After being involved in markets for some time, I began to see how important it was to factor this dynamic into my strategies. These events can be triggered by multiple factors, making them even more difficult to discern. That being said, as traders and investors, it’s still wise to try and keep in touch with the market. However, that is simply not enough, as everyone gets taken by surprise at one point or another. So, what do we do then?
Factor It In
It seems rather obvious but the only way to protect yourself is to plan for failure. This sounds counterintuitive and even strange to some but it is actually one of the most valuable lessons I have ever learned. It’s not that you don’t plan for success but that you also plan for failure. When you are in a mall, school, or even office block you may be required to take part in a fire drill. This is where an evacuation plan is put to the test. Yes, planning for failure, not because you want it to happen but because it does happen.
You have to have a plan or course of action if you wish to survive. This applies to markets as well and you will be surprised at how many individuals lack this basic wisdom. I will outlay a few examples of how to structure a basic plan of survival that can even be beneficial in some instances.
The Basic Hedge
Those who have been following my journey will know that I began shifting to stablecoins the first time BTC crossed $50K in 2021 and have maintained a healthy allocation ever since. At my highest level, approximately 40% of my portfolio was in stablecoins. Currently, my exposure to stablecoins is just below 20% and I intend to keep it that way. Actually, it will continue to grow as I am busy building up a few trading accounts, which are denominated in USD. This brings me to the next viable option.
The great thing about futures is the ability to profit regardless of what direction the market chooses to take. However, this is perhaps not one for everyone, as you should ideally be experienced when it comes to trading with leverage. That being said, there is no better time to open up a position than after a massive move. Trading is not the best way to generate an income but it can be a great wealth builder. Big moves up or down ultimately create tremendous trading opportunities. The only problem is that this is not a daily or weekly occurrence, which is what is required if you are looking to generate a monthly income. The upside then to a collapsing market is that it simultaneously creates opportunity. The best trades or even investments are those made after a big correction or crash.
You can read my recent article, “How To Build A Trading Account From Zero” if you are thinking about traveling this particular path. You will also find the best exchanges to utilize as a beginner.
This can actually be one of the best methods but only if you are prepared to rack up tokens and forget about them. Looking back on some of my articles from Publish0x, I was somewhat surprised. Some of the articles that I published in 2020 were displaying earnings of $60 to $70 each when BTC was up at approximately $60K. This is a good investment of your time but only if you are prepared to hodl. Obviously, at the time of writing, they were worth a lot less. There are also multiple opportunities available to content creators outside of Publish0x. Hive is an excellent option because it also incorporates stablecoins. With your earning ratio set to 50/50, you are able to receive 50% of your earnings in HBD! This means that your stablecoin allocation is growing with the additional investment of capital. So, half of your earnings are safe in terms of depreciation outside of inflation, while the other half is captured in an asset that will hopefully increase in value over time.
This idea becomes even more attractive when you consider that HIVE is currently trading at $0.64 at the time of writing and has been as high as $3.41! Another important aspect to remember is platforms such as Publish0x, Read.cash, and Noise.cash all operate on a USD model, which brings me to the next approach.
In relation to the platforms that I have just mentioned, there is a dynamic that works extremely well in downturns. Due to these platforms operating on a dollar-based model, the amount of coin or token that you receive increases as prices depreciate. The lower the price, the more coin you receive. However, as previously mentioned the power of this dynamic is only truly realized when prices recover. For instance, Statera is currently trading at $0.017 and can be earned on Publish0x. The all-time high is $0.46 and even if STA were only to return to the $0.10 price range it would make a significant difference to the value of your holdings.
Another side to the dollar-based model is platforms that not only pay you based on a dollar model but also retain and record the value in dollars. What this in essence means is that if you earned $10 prior to this recent crash, you would still have $10 regardless of price action. In other words, your capital would only be exposed to market conditions once you withdraw it. A popular platform that uses this model is Cointiply. Cointiply displays your earnings in USD and BTC but hold them in USD. This causes your BTC valuation to go up and down with the market. The USD value is however unchanged and can only increase as you earn more. Cashing out from Cointiply and other similar platforms is best to do at the base of a crash. This way you are able to receive more BTC, Doge, or whatever coin you decide to choose. FireFaucet earnings are also locked in USD.
Passive Income Structures
This is one of the best ways because a guarantee of new capital every day allows you to buy the opportunities that you manage to identify. Capital can be used to DCA or wait for a confirmed bottom. A reversal can be an even safer point of entry. Some passive models will generate alts by default and can simply be hodled, or swapped for a preferred project. Heavily oversold projects can also be an option, provided they are quality. It is also wise to once again have passive models that also generate stablecoins. Be sure to maintain a healthy allocation to stables. If you have a lot of skin in the game then increasing your stablecoin allocation makes even more sense, as you won’t really be sacrificing potential gains. Greed will entice you to put everything in alts, or even BTC but maintaining a level of stability is vital.
Some of these ideas will be smaller, while others will be larger, in terms of dollar value. What is important to remember is the sector that you are exposed to. There will be many projects that still go on to realize massive surges in price. In these particular instances, it becomes less important to have “heavy bags”. This is also why doing significant research is imperative if you truly wish to benefit in time. Investing is an exercise that requires time, even within the Crypto space.