You may be bullish. Your friends may be bullish. And Joe Lubin certainly isn’t losing any sleep. But the truth remains for all HODLers – being in a bear market is a little bit scary. There’s always the sliver of doubt that flickers through one’s mind momentarily, like interference on the TV.
What if Bitcoin doesn’t go the distance? What if prices never recover? What if my altcoins aren’t worth the nickel they weren’t minted on? We all know that crypto is the future. But Bitcoin tumbling to $5,826.41 on June 24th didn’t exactly instill confidence.
And according to Joe DiPasquale of BitBull Capital, the price will continue to fall. He says:
“This weekend’s price action is directly in line with the trend that our research has identified. The hope is that the upward momentum will carry us out of the $6,000-$7,000 range Bitcoin has been trading in for the past month or so. However, if this most recent bull run loses steam prior to cementing itself above $7,000, then our prediction of $5,000 Bitcoin is likely to be fulfilled sooner rather than later.”
If you’re tired of waiting for the next bull run, there are other ways to make gains. Your best bet right now could be trying your luck with crypto hedge funds. They can use their trading experience to make your investments work for you rather than steadily depreciate.
Here are two ways you can make money, even in a bear market:
2. Directional Strategies
Crypto hedge funds can use their accumulative expertise, knowledge, and access to predictive data to apply directional strategies to your investment portfolio. The basic premise behind directional strategies is the belief that the price will decrease or increase in the future – and speculate on that belief.
Think about Bitcoin futures, for example. Even against the horrendous bloodbath of Bitcoin prices this year, when the stampede of bulls fleeing the market slayed everything in their path, crypto asset managers were craftily securing investments.
By entering into a Bitcoin futures contract, they secured the Bitcoin prices high to offset the dramatic fall that followed. Of course, you can win or lose on futures trading. Bitcoin prices could have just as easily kept climbing.
In a bear market, crypto asset managers are shorting on Bitcoin futures, which means setting a future date very close to the current date and securing profits even when the market in general declines.
Another directional strategy could be investing in early-stage ICOs. Hedge fund managers have trading expertise and tend to select the projects that are most profitable.
But again, like any trading tactic, they can easily lose as well.
1. Non-Directional Strategies
Non-directional strategies generally fall under arbitrage or quantitative trading. And many an enthusiastic trader may have tried one of these themselves. For example, buying when you see that the fiat value of a token is a few cents lower when purchasing with BTC or ETH. Or buying from one exchange at one price and selling on another at a premium.
These strategies are time-consuming and short-lived. You pretty much have to quit your day job to keep taking advantage of these brief market fluctuations.
Quantitative trading techniques involve high-frequency trading, usually working off the back of statistics or an algorithm with quantitative tools. These are “rapid fire” strategies that your average investor doesn’t have access to – but crypto hedge funds do.
Or you can keep HODLing until the market rebounds. It’s up to you what you do with your crypto. There is no secure strategy when investing. So, as always, if you’re going to give a hedge fund a test drive, make sure you can stand to take a loss as well as a gain.