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In the decade following the introduction of Bitcoin, it was a mountain tour for cryptocurrency investors – especially after the start of the bull run at the end of 2017. There were chills and falls and higher than low 10 years. Of course, those who have been smart – or lucky – enough to invest in the early days will be very happy with their performance.
Just like the roller coaster, after a steep climb comes an exhilarating descent – sometimes frightening – and this was the case with Bitcoin and the other major criptos of 2018.
There is talk of another bull run on the horizon, although it will not happen to anyone. So what strategies do cryptor investors employ in a bear market? Basically, you have four options – as listed below. Choose wisely.
Short To sell
"Shorting" is when a trader causes a certain market to decline. If their impression is correct, then they will benefit. Probably the most famous example of short selling occurred in September 1992, when the Hungarian-American investor George Soros yielded about $ 1 billion after correctly forecasting that the British pound would fall when it was forced by the European exchange rate mechanism.
The short circuit is made possible through Contracts by Difference (CFD), or derivatives, as they allow the trader to sell assets that he does not actually own. Simply put, a short trade is executed when an asset borrowed, or instrument, is sold at the current market price. If the market shifts the trader's path subsequently, and the price of the asset decreases, the value of the position increases. From there the trader can choose to buy back the now cheaper asset and make a good profit.
The 1,200 instruments offered by the main global trading and investment platform eToro at its 10 million + members have the possibility of short, even within the cryptocurrency and equity markets. Never the expression "the loss of a man is a gain of another" has been so apt.
Hödl
The first time you see "HODL" when someone is discussing cryptocurrencies, the word makes you stop reading. Do you think: "Is it a spelling mistake?" Well, yes it is – at least originally it was written incorrectly. Now, rather amused, HODL has generated a life of its own. It has evolved to represent a long-term trading strategy and a philosophy for cryptic investors.
HODL has become an acronym (or even a backronym) to "hold on for life" in the sense that even when investors are deep in red with their scrambled should not be put under pressure and sell, driven by the belief that they will, in the end, reap great benefits, once the mass adoption has been achieved.
The quartz has announced HODL as one of the most important terms in the culture of cryptography in 2017, describing it as a determination to "stay invested in bitcoins and not capitulate to swooping prices".
There is certainly a great potential for HODLing as an investment strategy, and not the selling under pressure, as history shows us – and not only in the world of cryptocurrencies.
One of the most notorious examples of HODL's failures occurred in the mid-1970s when Ronald Wayne, Apple's third co-founder – alongside Steve Jobs and Steve Wozniak – sold his 10% stake in the market. then start-ups to the other two co-fans for $ 800.
In August 2018, Apple reached the historic milestone of reaching a $ 1 trillion market capitalization. If Wayne had adopted a HODL mindset, his share of Apple would be worth about $ 100 billion today.
It is impossible to predict the future, but Jay Smith, one of the eToroThe most recognizable Popular Investors (whose exchanges can be copied by others – like anyone else on the platform), believes that staying strong will reap the greatest awards. Smith – a.k.a. full-time dealer jaynemesis on eToro – describes his trading style as "fundamentals, future and HODLing".
"I firmly believe that cryptos will change the world, replacing stock markets, most currencies and fueling everything from machine-to-machine payments to the Internet of Things through streaming media, forecasting markets, governance systems, voting systems, even potentially Internet, "he continues. "Having said that, there is still a long way to go, we are in the very early stages for most of these areas."
Continue to invest
When the value of the criptos falls, many investors double, effectively reinforcing their commitment to a potentially risky policy, because prices are so low. As with HODLers, those who continue to invest see the long-term benefits of the encrypted.
Despite the bearish market of 2018, many eToro users have invested more in Bitcoin, XRP and a number of other encrypted available on the platform – just see the market sentiment (image taken on 30 November 2018).
This is not an investment advice or an investment recommendation.
Diversify
If you have gone all-in on cryptos and are waiting for the arrows to turn green rather than red, it might be a good idea, during a bear market, to consider investing in other asset classes. By diversifying your portfolio this approach will spread your overall risk.
On eToro there are over 1,200 financial instruments, in six asset classes, on offer: cryptocurrencies; funds traded on the stock exchange (ETF); stocks; indices; raw material; is currencies. There are other ways users can invest with eToro, in addition to manual trading. L & # 39; innovative CopyTrader tool allows customers to automatically copy the trades of major investors. Users can easily view and copy anyone with a profile and expand their portfolio using CopyTrader while still using an individual strategy.
Another option is CopyPortfolios™: eToro offers various portfolios included in cryptos, technology and traders with the best performances. This allows users to invest in multiple markets or traders based on pre-determined investment strategies.
The award-winning platform is truly a reference point for all your trading needs in an encrypted market.
