The market is heading down, and crypto winter has set in. How can you make money in spite of prices moving downwards?
Before we reveal the best ways to make money in a bear market, we want to encourage you to always be responsible with your crypto investments. Please be aware that all investments carry risks and crypto is no different. Do not invest more than you can afford.
1. Huobi Earn (Easy)
2. Staking (Intermediate)
3. Mining (Advanced)
4. Grid Trading (Easy)
5. Short derivatives trading (Advanced)
6. Short leveraged trading (Advanced)
7. Averaging down (Easy)
3. Mining (Advanced)
4. Grid Trading (Easy)
5. Short derivatives trading (Advanced)
6. Short leveraged trading (Advanced)
7. Averaging down (Easy)
1) Leverage on a Huobi Earn account while waiting to buy in
Difficulty: Easy
Most exchanges these days do provide an interest-earning Earn Account, where you can deposit a supported cryptocurrency to earn interest by just leaving your cryptocurrency inside.
For example, you are looking to purchase Bitcoin and you have a target price in mind. Instead of leaving fiat money (like USD and EUR) in the bank earning low interest (bank savings interest rates in the US average about 0.03%, and in the EU it can be even lower), you can convert that fiat money into USDT (a cryptocurrency call Tether that is pegged to the USD) which can earn you more than 6.5% APY interest (rates may vary over time) on Huobi Earn.
This allows you to accumulate ~1.7 USDT per day with a deposit of 10,000 USDT. This way, while waiting for your target price to hit, you will be earning an extra ~1.7 USDT every single day. It will also give you additional USDT to purchase more BTC.
Once you have purchased your Bitcoin (BTC), you can also do the same by depositing BTC into Huobi Earn to accumulate interest while waiting for your selling price to hit.
Though the interest for BTC might be lower, but one should keep in mind that the interest is paid in BTC which will rise and fall in value based on the market price. You can also enable the ‘Auto Transfer’ function that will automatically transfer your interest back into the savings account allowing you to compound your cryptocurrency!
By adopting this strategy will enable you to earn extra tokens by generating interest while waiting for your target buy or sell prices.
2) Staking
Difficulty: Easy / Intermediate
Staking allows you to earn token rewards by being part of the validator pool for a proof-of-stake chain such as ETH 2.0 (also known as the Ethereum Consensus Layer). Staking on Huobi Global is fairly straightforward with our ETH 2.0 Staking service.
You can stake other tokens like HT as well by buying them on the Huobi Exchange and then staking them on their respective chains using the appropriate wallet. Specific instructions will vary depending on the kind of wallet and chain you are planning to stake, and we recommend this only for more advanced users.
3) Mining
Difficulty: Advanced
Mining, or proof-of-work, is the first process used as a blockchain consensus mechanism. Although mining has fallen out of favour in more modern blockchains because of its high energy usage, it is still a profitable undertaking for older cryptocurrencies like Bitcoin, Dogecoin, and Litecoin.
Mining usually requires specialized hardware and some technical knowledge. You can read our introduction to mining here!
4) Grid Trading
Difficulty: Easy
Grid Trading is a bot trading feature on Huobi that allows you to set parameters on your purchases on various cryptocurrency pairs like BTC/USDT, ETH/USDT, XRP/USDT and many more.
By filling in the upper limits (Maximum buy price) and the lower limits (Lowest buy price), it will tell the bot to purchase the cryptocurrency based on Grids.
Each grid is a price range of the cryptocurrency.
For example:
Cryptocurrency A, current price = $1,000
Upper Limits: $1,500
Lower Limit: $800
Grid: 10
This means that at every grid, the price range is $70, [($1,500-$800)/10].
If Cryptocurrency A reaches $930, a buy order will be executed. Once this buy order is executed, you will own a small amount of cryptocurrency A.
When the price goes up to $1,070, a sell order will be executed, and you will profit 7% based on that grid.
Conversely, if the price falls the bot will continue to buy at each grid point, effectively Dollar Cost Averaging your purchases. However, no orders will be placed once it goes below the Lower Limit of $800.
You can close the bot at any time to take profit or realise losses, upon closing the bot, you have 2 options.
1. Close and sell — This will sell the cryptocurrency at the best available market price to return USDT to you.
2. Close only — This will allow you to keep the amount of cryptocurrency that you have bought through the bot in case you want to wait for a better price to realise your gains or losses at.
Grid trading is advantageous for people who don’t have time to trade and for people who need a system to handle the emotional aspect of trading for them. We’ve got a really handy Grid Trading guide that will tell you more about our system.
5) Short positions on derivatives trading
Difficulty: Advanced
If you think that the price of a token is going to fall, you can try to find a matching party in the Huobi Futures market who thinks the opposite way and enter into a contract with them to sell them the token at today’s price, and buy it back later at a lower price.
Derivatives like futures and perpetual swaps allow you to trade profitably in a bear market, but investors need to understand that they do not own the underlying token – trading derivatives means entering into contracts with other traders about the likelihood of a positive or negative price change of an asset. If you prediction is correct, then you make money from that contract.
Huobi Futures allows us to profit from a bear market because any price change, whether up or down, is an opportunity for profit, including leveraged trades.
6) Short positions on leveraged spot trading
Difficulty: Advanced
A short leveraged spot position on the Huobi Exchange happens when you borrow a token from the market so that you can sell it, and then buy it later for a lower price to return to the party you borrowed from.
Huobi Global cross-margin trading offers leveraged short spot trades for BTC, ETH, and LINK. You can borrow against your crypto account balances in order to get more profits if a token’s price moves down or up.
Please be aware that margin trading involves borrowing assets and this includes risks and opportunities that are not part of normal spot trading.
7) Averaging down
Difficulty: Easy
Averaging down is a variation on Dollar-Cost Averaging. The idea is that as the price of a token falls, you make regular purchases of proportionally more of that token so that your average purchase cost of the token goes down in a bear market. The plan is that you will hold these tokens until the market goes back up past your purchase price.
For example, if the price of BTC today is 10,000 USDT and it falls by 10% at your next recurring buy date, you will buy 10% more BTC than you did at the start. If it falls by 20% the next time, you buy 20% more.
Purchase your choice of cryptocurrency on a recurring basis, allowing you to buy the cryptocurrency at different price points and ideally allowing you to accumulate the cryptocurrency that you have chosen during a downward trending market.
New to Huobi? Register for a Huobi account and receive up to $300 as a ‘Welcome Bonus’ to help you start your investment journey! If you’re an existing user, check out Huobi Earn, where you can start earning interest from your idle cryptocurrencies!
