There’s no debating it. We’re officially in a bear market.
To be clear, stocks are doing just fine. The bear market is elsewhere:
With crypto-currencies like Bitcoin and Ethereum!
For many investors, a common sentiment has taken hold:
“Cryptos are down big! Sell everything and run for the hills!”
But if you run for the hills, you’ll be missing out on one of the greatest wealth-building opportunities of our era.
You see, as Wayne explained to you in his essay last week, there’s a big opportunity in this bear market — you just need to know how to take advantage of it.
So today, we’ll show you three simple ways you could use this “bitcoin bear market” to start earning big returns right now.
Strategy #1: Bet Against the Market
One of the simplest ways to make money in a bear market is to “go short.”
Going short, or “short selling,” is when an investor bets on the price of an asset going down instead of up.
Here’s how to use this strategy with cryptos:
- Borrow coins from a crypto exchange like Kraken or Poloniex
- Sell those borrowed coins
- Then, if prices drop, take the cash you received from selling your borrowed coins, buy back the coins at a lower cost, and pocket the difference.
For example, let’s assume you do a short sale when a coin is trading at $100.
If its price drops to, say, $50, you buy a coin to replace the one you borrowed. Then you give that coin back to the exchange, “close” your short position, and pocket a $50 profit.
Easy, right? There’s just one problem:
This strategy is riskier than it looks!
You see, crypto prices have a habit of confounding the bears by going up instead of down. And because crypto prices can go up infinitely, your potential losses are unlimited.
For example, in the case above, if the price of that crypto went up to $5,000, instead of making $50, you’d lose nearly $5,000.
But don’t worry, there are other ways to profit from a bear market besides going short…
Strategy #2: Fast Profits
Another way to profit from this bitcoin bear market is by using Technical Analysis to trade in and out of various cryptos.
Technical trading relies on short-term price moves. You see, even when the general direction of a crypto is down, there can be “peaks and valleys” from moment to moment.
A technical analyst attempts to buy at the lows (the valleys) and sell at the highs (the peaks). By doing this over and over again, investors can make small, quick gains that add up to big profits.
There’s only one problem:
To use this strategy successfully, not only do you need to sit at your computer all day, but you need to be an expert in technical analysis. You need to understand pattern formations, moving averages, and indicators such as RSI.
So unless you have significant experience with technical analysis — and a lot of time on your hands — this strategy probably isn’t for you.
Strategy #3: Buy Low, Sell High
Then there’s another strategy…
“Buy low and sell high.”
You might wonder how to “sell high” if the market is dropping, so let me explain.
When you invest in a crypto on an exchange like Coinbase or Binance, even if it’s the first day the crypto trades there, you’re already “late to the party.”
You see, an exclusive group of investors got into these cryptos before they started trading.
They invested during that crypto’s Initial Coin Offering (or “ICO” for short), which is a way for crypto companies to raise seed funding for their projects.
And because these investors got in so early, they got their cryptos at an extremely low price.
In fact, they got in so low, that even if the price of that crypto drops during a bear market, these early-bird ICO investors can still be sitting on massive profits.
As an example, look at a crypto called DigizDAO (DGD)...
At its peak, DGD traded for roughly $553. But during the most recent bear market, DGD’s price tumbled to $94. That’s an 83% loss — ouch!
But here’s the thing…
Investors in DGD’s ICO paid just $3.24 for their coins…
So even though this crypto is down 83% this year, ICO investors are still up by 2,900%.
The Real Way to Profit from the Bitcoin Bear Market
Buying “low” at the ICO and selling “high” later is a great way to make a bundle, regardless of what type of market we’re in.
There’s just one problem:
Because of new regulations, most ICOs are now closed to U.S. citizens.
Thankfully, we know of another strategy you can use to “buy low, sell high” during this bear market. And with this strategy, there aren’t any problems or challenges — just upside.
Wayne will tell you all about it tomorrow…
So stay tuned!