When the next market-wide correction shall come, will you be ready?
Robert Kiyosaki says that “It's not now much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”
Corrections and dips legit part of the market circle. And Just as easy it is to make a lot of money in crypto from pumps and bull runs, that's how easy it is to lose both your previous gains and potentially your capital when the market dumps or enters or bear run.
In this post, I will be sharing with you my various strategies for preparing for a correction or bear market during a bull run.
Because, as the saying goes, you prepare for farming in a time of abundance.
Below are the strategies I currently use to prepare myself for market corrections while riding every pump and bull runs to the moon and beyond.
As you invest in new projects or trade your favourite cryptocurrency, learn to take profit.
For example, if you catch a gem early enough and you happen to do a 5X, 10X, or 25X, on your investment you could at least take all your profit out and keep riding the pump with the original money.
Or better still, remove your capital and a portion of the profit that suits you and keep riding the rest.
Because in the end, the only profits you make are the ones you took.
At some point, like after the 2017 bull run, the market correction will set into a correction, which could possibly wipe out every dollar you made.
Therefore, taking profit is the first step to making sure you don't lose everything you gained during the bull run.
So what do you do with that profit you took? Go on a shopping spree for more shitcoins. Or you will put them into more liquid and relatively less volatile cryptocurrencies like BTC and ETH?
My preference is to use a significant (by my own standard) portion of that profit to secure my position in a stablecoin like USDT, BUSD, USDC, etc.
Depending on your account size, between 5% to 50% of all your profits should be going into your stablecoin of choice as security against any market crash.
And since we're against keeping your crypto idling around in your wallet waiting for market correction that might not come anytime soon, in the meantime, you need to put that stablecoin position of yours into some productive use by letting it work for you.
That's right. Put every crypto you own to work for you the same way you work hard to earn your crypto.
By lending your stablecoins on crypto lending platforms like Venus and Compound finance or their centralized alternatives like Nexo and Celsius you can earn some interest while waiting for a 2018 to 2019 like cryptocurrency market crash to buy the dip.
In a rational market, you can safely consider any cryptocurrency with a market capitalisation of at least 50 billion as a blue-chip coin.
Blue-chip cryptocurrencies are coins or tokens that are highly popular with investors which shows by their very high market capitalization and strong fundamentals.
They're relatively less volatile as it takes a lot more money to affect their price movements compared to less capitalized coins.
These are coins you will be confident to HODL for the next 5 to 15 years before considering selling them or start cashing out.
Consider any money your invest in these coins as your retirement savings account.
But as the market is not as rational as you would expect, choosing these coins can be very hard, but I got your back.
If you feel a coin deserves to be on that list, feel free to mention them in the comments section of this post or in our Telegram group and I will give them a thorough look.
I was once attacked on Reddit by some Bitcoin fanatics when I suggested this strategy for securing your crypto profits in a bull run. But it's left for you, the reader to find sense and use of it if you feel like it.
If you have made a lot of money from your crypto investment and there's a traditional or even a crypto-related business you're very confident you can pursue as an entrepreneur, there's nothing wrong with investing in such a business.
Some will argue that you're cashing out of crypto and into traditional investments but that's a very naive idea and for many reasons.
Traditional finance and business will always coexist with crypto. Thinking that traditional business is totally irrelevant and useless is not just naive but very myopic.
The idea behind this strategy is that profits from whatever startup you created will be used in further strengthening your crypto positions for almost forever. Giving you a very solid DCA money that can always come in handy to buy a dip.
Going all-in in crypto or anything for that matter is reckless and nearly always stupid, even if it pays off sometimes.
Crypto in its current nature is extremely volatile. It can easily make you rich very quick with a pump and take it all from you in a blink of an eye in a market correction.
Smart investors will take some profit when they have it and protect that profit from extreme volatility by securing them according.
In this post, I have shared with you some of my strategies for securing profits in a bull run and prepare adequately for a market correction.
I have suggested that every time you take profit from an investment or trade, try and allocate between 5% to 50% of it to a stablecoin.
Then lend out that stablecoin out on a crypto lending platform to earn interest on it.
By the time the inevitable market correction comes, you would have amassed a significant amount of stablecoin to buy the dip.
And if the market crash never comes, you lose nothing, as your stablecoin is earning comfortable interest for you daily while your other coins keep pumping.
Other options we mentioned include: investing in blue-chip coins and a traditional or crypto-related startup.
Never allow yourself to be a victim of a market correction. Rather, prepare, wait and take good advantage of it to grow your crypto portfolio without investing fresh funds.