In early August, the cryptocurrency market saw its capitalisation drop by 17%, losing $300 billion in just one day on 5th August. Major assets like bitcoin, ethereum and key altcoins also took significant hits. Sergey Zhdanov, CEO of the EXMO.com crypto exchange, shares strategies for making money from cryptocurrencies even in an unstable market.
Despite the volatility of the crypto market, traders can still maximise their assets. The key is to use the right strategies and make informed decisions. Here are five tips on how to stay profitable during periods of market instability.
Control your emotions
When the market is chaotic and prices are volatile, investors often panic, fearing they’ll miss out on the gains they saw before the drop. This leads them to sell their assets hastily. But when the market rebounds, they fall into the trap of FOMO – fear of missing out – resulting in further losses.
The first piece of advice is not to panic. Patience is crucial for keeping your cool and increasing profits.
History shows that there’s always a period of exponential growth after every downturn in the cryptocurrency market. Understanding where the market is in its cycle can help you grow your capital and keep your nerves in check. Sticking to a disciplined investment plan will prevent rash decisions. It’s essential to wait for your target price levels and stick to them.
Capital is key
To avoid making emotional decisions and see market crashes as opportunities to buy reasonably priced assets, you should keep 30-50% of your investment capital available for purchases.
This way, you can buy more assets, improve the average purchase price of your cryptocurrencies, or invest in passive income programs like Earn on EXMO.com, allowing you to generate yields consistently regardless of market conditions.
Dollar-cost averaging (DCA)
Dollar-cost averaging (DCA) is an investment strategy which involves regularly investing a fixed amount of money into cryptocurrencies, regardless of the current asset price. Over time, this results in an attractive average purchase price for your assets, and this method’s clear plan and discipline help you weather market volatility.
You can use this strategy consistently or adjust it to fit the market situation, such as starting regular purchases when the asset price drops by 15-20% from its recent high.
Deviation from the 200 MA (200-day Moving Average)
The moving average is one of the simplest and most popular indicators in technical analysis. It’s the average of an asset’s prices over a specific period – in this case, 200 days. This period is considered crucial for long-term investments.
Investors usually look at how the 200 MA interacts with the 50-day Moving Average (50 MA) and the crossovers they create. But just as important is how far the current price is from the 200 MA.
For instance, if the price drops below the 200-day moving average by 50% or more, it might be a good signal to buy. These levels often indicate a local bottom.
On the other hand, it might be wise to sell cryptocurrency when its price rises above the 200 MA by at least 50%. You could increase this threshold to 100-150% in a bull market.
This strategy has worked like clockwork with bitcoin for the past seven years.
EXMO.com’s Earn program for passive income
The Earn program on EXMO.com guarantees steady and regular rewards for holding assets in your crypto wallet. This means you can grow your cryptocurrencies without actively trading or constantly monitoring prices, regardless of whether the market is rising or falling.
To join Earn, simply register on EXMO.com, start a subscription and supply a certain amount of assets for 30, 60, 90 or 180 days. The rewards will be automatically credited after the subscription period ends. For consistent earnings, it is possible to set up automatic renewals.
The program includes over 20 assets, including bitcoin, ethereum, stablecoins, DeFi tokens and popular meme coins. Earn allows traders to diversify their risks by investing in different cryptocurrencies.
Additionally, by holding EXMO Coin – the very own token of the EXMO.com exchange – it is possible to take advantage of the Standard and Advanced subscription packages to receive higher rewards. Additionally, by inviting friends to join, everyone can earn an additional reward of up to 60 USDC from their first subscription.
By following these tips, you can navigate periods of volatility calmly and profitably to avoid the FOMO trap.
Disclaimer: The statements, views and opinions expressed in this article are solely those of the content provider and do not necessarily represent those of CoinChapter. CoinChapter will not be responsible in any way for the content of the same. Do your research and invest at your own risk.
