FX.co ★ Three investment strategies in a situation of falling the cryptocurrency market

Method 1: Short sale

During a prolonged market recession, so-called "short" sales serve as a powerful instrument when the position opens at a higher asset price and closes at a lower price. This method is usually used to hedge portfolios and reduce risk, since it is quite risky in any other case. With a short position, the maximum losses of a trader can not be estimated, since they directly depend on the price increase. With a long position, losses can be calculated. In addition, they have borders, as the price can not become negative.

Method 2: Swing trading

Swing trading makes it possible to benefit from short-term movements in the price of a cryptocurrency, rather than a large macro trend, so traders accepting a high degree of risk and possessing significant experience in technical analysis of short-term movements (including forming patterns and the RSI indicator) make use of it. The market volatility, which is observed during a major collapse, provides perfect conditions for entry, and experienced enjoy it, buying coins in the "bearish” market at the lowest price and selling them at the maximum one.

Method 3: Passive income

Less advanced, but not lost the right to exist, methods of trading include the strategy of passive income generation regardless of what is happening in the market. So, coins which are paid as a reward in the Proof-of-Stake systems bring about 5-10% (and higher) of annual income, and those that are traded on exchanges provide such benefits as fee reduction and even a profit distribution form to return it to the coin holders. The first type of income generation is more predictable and similar to dividends, while the second one results in a high risk of losing the savings in case of the collapse of one or another exchange.