Crypto is in a slump, with prices having plummeted in recent weeks. Bitcoin has gone from $48,000 in March to a mid-May price of just $30,000 and the Terra stablecoin has spiraled, de-pegging from the US dollar.
However, there is no reason to panic. Crypto is an asset class characterized by high volatility, and investors who keep their nerve can benefit from the bear trend and come out the other side in an even stronger position than before the collapse.
Here are a few valuable tips for how to best exploit a falling market:
Put your capital to work immediately
Some investors choose to cut their losses and sell in a crash, while others choose to HODL and wait it out, but the best approach is to put your crypto to work earning you a passive profit, rather than just letting it sit idle.
Let’s use the ArbiSmart (RBIS) project as a use case, as the crypto investment platform, first listed in January 2022, offers a couple of great ways to generate passive profits even in a bear market.
To start with, the platform offers automated crypto arbitrage, a type of investing that makes money from brief windows in which a coin is available across a number of exchanges at different prices at the same time. These temporary price disparities emerge all the time, with just as much regularity in a bear or bull market.
Let’s say that the user deposits Bitcoin. It is then converted into the native token RBIS and used to generate up to 45% a year on their behalf, by the automated system. So instead of losing much of its value in a falling market the user’s crypto capital is actually growing, earning a consistent return on investment.
This month, ArbiSmart is also introducing an interest-bearing wallet. So, while waiting for the bearish trend to end, rather than leaving their money just sitting there, wallet holders are able to earn up to 147% on RBIS and up to 49% on all other supported currencies.
Bear trends are part of a larger cycle, and eventually, the market will recover, so it is worth thinking ahead to when the market finally sees an upturn.
One way that investors can benefit from falling prices is by implementing an Average Purchase Price Strategy, which involves exploiting a temporary slump by buying while prices are low.
Here’s how it works. Before the crash Coin A may have been sold at $2 and to buy 100 coins you will have spent $200, but then during the crash it dropped in value to $1, meaning your 100 coins are now worth just $100.
What if instead of cutting your losses and selling, you chose to buy another 200 coins, at the current $1 price? Now you have 300 coins in all and have spent $400 in total for an average purchase price of $1.33. Once Coin A bounces back, to its pre-bear trend $2 price, you can sell for a profit reaping the rewards once the market recovers.
Pick crypto investments with long-term potential
An asset’s long-term prospects can be hard to evaluate, but tokens powering projects that are profitable, secure and continually expanding are best positioned to succeed.
Returning to our ArbiSmart (RBIS) example, the project has a packed development schedule, with multiple new EU authorized RBIS utilities in the pipeline for the remainder of 2022, which should increase token demand, drive liquidity and enhance the coin’s viability.
In Q3, shortly after the release of the interest-generating wallet, including a mobile version, ArbiSmart will be introducing thousands of unique digital artworks as well as a marketplace where participants will be able to buy and sell Non-Fungible Tokens (NFTs).
Next quarter will also see the release of a decentralized yield farming service, offered via Uniswap, which will reward users for providing liquidity with 0.3% from the fees on each trade and up to 190,000% APY. By the end of the year, ArbiSmart also plans to launch a crypto exchange, as well as a gaming metaverse where users will be able to make real-world profit buying, building on and selling virtual plots of land.
Since RBIS is required across the ArbiSmart financial hub, to buy digital real-estate, purchase NFT’s, and be eligible to earn interest on stored capital, demand will rise with the addition of each new utility to the ecosystem. Meanwhile the RBIS supply, which is finite, will shrink, pushing up the price.
As soon as the recovery begins, RBIS is well-positioned not just to return to its pre-bear market price, but to take off as the ecosystem adds new products and services. To seize the opportunity, the time to buy RBIS is now!
*This article has been paid. The Cryptonomist didn’t write the article nor has tested the platform.