Can the crypto market crash like the stock market? It surely can, and during such times, you need to know how to stay afloat. While the media will try and draw a lot of public attention to this fact, highlighting the negatives and magnifying the harmful repercussions, the more experienced crypto traders find these times to be actually lucrative opportunities for investments. Most people end up losing a lot of money during crypto market crashes. At the same time, there are traders who know ways to cope with such crisis and they have tools to amass profits even in such tough times. These are some of the strategies to overcome the hurdles posed when the crypto market is in turbulence:
- Arbitrage: This involves buying and then instantly selling off the asset to get profits. The profits can be made because of price differences across marketplaces. So, arbitrage is buying a crypto coin in one market and then immediately selling it in another market. The crypto space offers an ideal environment for this strategy. Its wise to use automated cryptocurrency trading app to avoid any loss. Learn more about bitcoin equaliser, which is one such legit trading app available in the crypto market. It can be your go-to strategy during crypto market crashes as long as there are price inefficiencies and the risks of losses are practically zero when done rightly. The only downside is that you must have technical knowhow of various exchanges. You will probably need to buy specialist software for arbitrage and some trade platforms can also charge you steep fees.
- Buy Dips and Hold: This means that when there is a dip in the price of a crypto coin it presents a good opportunity to buy it. If the asset is strong, the prices will soon bounce back when the market gets back its confidence. Most sellers or buyers are not really professional traders and the market is sensitive to news stories and media hype. If news is positive people will automatically rush to buy the asset; when news is negative, they will panic to sell it below the true price. As an investor with funds, you must buy these undervalued crypto coins. Once you make the trade, hold onto these coins during this period of uncertainty and make big profits when the market bounces back. This strategy does not need any specialist software or extreme accuracy. But the approach is a long-term one and quick profits are difficult to guarantee.
- Trend Following: When you feel that a certain trend is likely to continue for a while, or you cannot foresee which direction the price will go, you can follow the trend as it is risk free. When the trend is upward, choose the long trades; when market is down, you should opt for the shorter ones. You may use tools to maximize your gains and reduce your risks like stop-loss orders or margin trading.
- Investing in uncorrelated assets: When the crypto world is unstable, non crypto assets will flourish. So, you can shift to fiat currencies just like investors turn to gold when the stock market is in shambles. Keeping a diversified portfolio is always wise and this strategy is easy to follow. But, you need financial knowledge or traditional assets and ability to manage the portfolio.
Invest in crypto funds: To benefit from all these above-mentioned strategies and eliminate the hassle of portfolio management you can opt for tokenized crypto funds. Through this, investors can enjoy skills of professional traders and benefit. While this has not been effective till date because of tax issues, legal compliance problems, fear, and impracticality, things may