With a current combined market capitalization of $894 billion, the digital currency ecosystem is experiencing a period of extended low-price action best characterized as “Crypto Winter.”
This current crypto winter technically began after Bitcoin and some major altcoins hit their all-time highs (ATH) last November. Since this performance was recorded, there has been a gradual fall in price that recently pushed BTC to the $20,000 mark, its lowest level last recorded around 18 months ago.
Overall, crypto winters represent a time when investors are becoming so cautious about making bets in the space for fear of being liquidated.
Navigating the crypto winter
While crypto winters are a global phenomenon, there are still a number of investors or traders who are not staying away from the markets. However, handling investments during the crypto winter requires a very special skill that not everyone possesses, and as such some relatively cautious investment strategies should be applied across the board.
Some of these are discussed below;
- HODLING: Is a term suggesting that the digital currencies remain idle in the wallet in which they are kept.
This poses no risk whatsoever for the owners, however the coins/tokens are still at risk of depreciation as almost every digital asset is negatively impacted in the crypto winter. This strategy isn’t that perfect considering the fact that even if you’re hedging something by HODLing, you’ll lose. The two best options for hodling right now are Metamask and Trustwallet.
Available as a browser extension and mobile app, Metamask provides a user with a key vault, secure login, token wallet, and token exchange—everything needed to manage digital assets. It offers the simplest yet most secure way to connect to blockchain-based applications. MetaMask generates passwords and keys on the user’s device, so only the user has access to accounts and data.
Trust Wallet is a cryptocurrency wallet that allows businesses to store, buy, exchange and collect non-fungible tokens (NFTs) and cryptocurrencies. Professionals can use the DApp browser to access decentralized applications as needed. Trust Wallet supports multiple types of cryptocurrencies and stablecoins. Trust Wallet offers mobile applications for Android and iOS devices that help professionals track transaction history, securely store private keys, and send, receive, or buy and sell NFTs.
However, if you actually have some coins on hand, it makes sense to generate additional profitability by pooling those funds into liquidity pools and start farming. You can use all your stablecoins, bitcoins, ethereums and any other altcoins this way. Because the market has a large number of liquidity pools for every taste with different returns.
- Mark out: Staking is a particular investment strategy in which a token holder locks their digital assets on – most often – a Proof-of-Stake (PoS) platform in exchange for a reward. Staking rewards can be paid out in the form of the other locked token, but earnings are estimated based on an annual percentage (APR) model. For example, Pancakeswap has a variety of different coins that can be obtained by staking CAKE tokens
Staking is a better strategy during times of extreme market volatility like crypto winter, but not all platforms out there are viable productive endowments for this type of business.
If staking is desired at all, it is advisable to use reputable platforms such as pancake swap or name swap for the highest APR on the market. Overall, investors should note that the accrued percentage usually does not take into account the coin’s fall in value at the end of the day.
- yield farming: Farming is a trading strategy that can prove to be very profitable if done in the right way and with the right platform. Farming is the process of collecting tokens in the form of a reward for providing liquidity to a project by placing a specific pair of tokens in a pool.
In farming, a user deposits a pair of tokens into a liquidity pool and earns rewards via a predefined token. There is a huge amount of different pairs with different levels of risk. The less risky stablecoin pairs tend to be favored during the crypto winter period as the stablecoins are usually immune to price declines. Stablecoin pairs are available on a variety of platforms, but some pay relatively more than the competition. For example APR for USDT-BUSD and USDC-USDT pairs further name swap are 6-7 times higher than the same pairs in pancake swap. Overall Comparing these two indices, the average APR for the shared pairs is higher at Nomiswap, but the total number of pairs is significantly lower. The APR is typically higher for mid-tier DEXs due to less competition in the farming pools compared to their more popular counterparts.
Farming can generally be said to be the most technical of these forms of investment as it is largely new and many investors do not yet understand how to navigate the complexities of the decentralized finance (DeFi) ecosystem. However, the APR attached can be huge, and coupled with the fact that there are farming pools dominated by stablecoins like BUSD/USDT, the risk associated with this venture is further minimized.
However, one should note that stablecoin trading is not immunity from risk, as the unprecedented collapse of UST became an eye-opener for many and therefore only assets with years of stability track records should be embraced.
- trade: In a bear market like ours, traders typically resort to short selling, a trading system in which an investor borrows securities, sells them on the open market, and expects to buy them back later for less money. This strategy can be very profitable, but it requires a lot of skill and is very time consuming.
Fortunately, the urge to trade on volatility during periods of prolonged price declines can be present, and while this can pay off, inexperienced traders are better off not taking the risk. Traders should be suspicious of Telegram channels or any other channels that send trading signals as most of them do not work. The best trading platforms are binance, OK, coin base and nominalex. The latter owns pretty much all of Binance’s liquidity and trading pairs, but also allows for numerous independent benefits such as an unlimited referral program and fee reduction. Consequently, it becomes the first choice when Binance is blocked in your country for any reason.
Farming in a quiet port
As investors try to navigate this current crypto winter, it should be clear that a positive track record is more of an exception to the general crypto engagement outcomes at this stage. But a certain strategy can provide a more or less safe and profitable result. The NMX/USDT pair name swap can guarantee many benefits and lower risks compared to other competing decentralized exchange platforms.
In times of crypto winter, many investors are running at a loss, companies in general tend to file for bankruptcy, trades are being liquidated, and many negative realities are dawning on people across the board.
While this may be the apparent reality, there is a defined group of investors who are making the most of the time to double their wealth and, in general, their valuation can rise as the market rallies over time. With HODLing, trading, staking, and farming among the strategies being used across the board, investors who choose high APR strategies like farming and pitch their tents on trusted platforms can make the most of this downtime.
As an active participant in the blockchain world, I always look forward to engaging with opportunities where I can share my love of digital transformation.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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