Cryptocurrency investors have endured an unbelievably tumultuous year but in spite of the markets dismal performance, there are still a few strategies investors could employ to make money in a down market.
[Editor’s note: This is a guest op-ed submitted by Julia Magas. The views expressed in this article do not necessarily reflect the views of Bitcoinist and are not intended as financial advice. The given article is an opinion piece for educational purposes only. ]
2017 was an almost magical time for cryptocurrencies. During this time, one could quite literally throw a bucket of paint at the wall and come up with a Monet. Obviously, this over exaggeration is a euphemism for the euphoria and FOMO (fear of missing out) that drove the cryptocurrency market up to new highs in December 2017 and sadly, those times have long gone.
As cryptocurrency investors approach Q4 of 2018, it can be assumed that after a bearish year almost everyone awaits the arrival of 2019 with crossed fingers and toes. Nearly all of the agreed-upon methods for making money from cryptocurrencies fell flat and unless one shorted the market or executed swing trades with impeccable timing, multiplying one’s funds proved to be something of a challenge throughout 2018.
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What Happened to the Crypto-Explosion Everyone Expected in 2018?
Analysts, hedge fund managers and nearly every retail investors on the internet had forecast 2018 to be the year of unbelievable gains. ICOs, mainnet launches, airdrops, cryptocurrency futures, and institutional investment all expected to push the bitcoin’s price above $20,000 and the total market valuation – above $1 to $4 trillion dollars.
While at the time, each of these components combined to form what appeared to be an inevitable rally to new heights but considering that hindsight provides the clearest vision, we can now review each of these categories to see how powerful assumptions can sometimes be misleading.
ICOs Fell Flat
Initial Coin Offerings (ICO) were meant to continue exploding into a nearly trillion dollar market in 2018 and various analysts predicted Ethereum 00 would rise from $1,400 to $3,500 – $4,000. Fast forward to the present and handfuls of ICOs have liquidated their crowdfunding for fiat and the hype and constant media coverage of ICOs nearly ground to a halt.
ICOs were meant to be an easy avenue for maximizing investments, but right at the start of 2018 global regulatory pressure by an assortment of governments and the precipitous decline in ETH prices made this less of a reality. Furthermore, a number of ICOs transitioned from being open investments to only allowing private and accredited investors which effectively cut out the little man.
Altcoin Mainnet Launches Misfired and Airdrops Fizzled Out
Once again, the general consensus dictated that altcoins would diverge from ERC20 standard by launching their own mainnets which would lure other crypto-startups to build on their platforms. This was further underpinned by the belief that altcoin values would skyrocket as numerous partnerships with established companies looking to become a part of the blockchain revolution occurred.
Investors expected to make a hefty profit from the flood of airdrops that would ensue after various altcoins transitioned from Ethereum standard to their own mainnet and while airdrops did occur, the frequency and projected price outcome failed to meet investor expectations.
Futures Placed a Damper on Price Growth and Temporarily Discouraged Institutional Investment
As the 2017 rally culminated in December 2017, the anticipation of CME and CBOE Bitcoin futures propelled the market higher and many investors expected Bitcoin gains to extend from $30,000 to $50,000 per coin. Fast-forward to today and research, along with an array of analysts now suggest that bitcoin futures may have had the opposite effect and bears shorting both bitcoin and ethereum may have actually pushed prices down.
Profits Still Exist, Even in a Down Market
So, since conventional cryptocurrency investing theory proved to be fallible, what options are left for turning a profit in the remainder of 2018 and the start of 2019? This is likely the question on the minds of every cryptocurrency investor.
Fortunately, all is not lost and there may be a guiding light at the end of the tunnel. While bullish price forecasts mostly fell short, adoption and crypto-investment platform expansion are definitely on the rise. From a technical standpoint it appears that the end of the bear market could be in sight and as Bitcoin approaches the end of the current long-term descending wedge, investors and analysts eagerly await a self-imposed deadline for either a strong upside or downside move.
The larger question should be: What if it doesn’t happen?
What if BTC 00 dips below the descending triangle and the entire cryptocurrency market capitalization plummets further?
The partnerships and blockchain adoption will continue. The exchanges will remain open for business. The world will keep on turning and blockchain technology will continue to grow its use cases, but what happens to investors? Or more importantly, how will investors make a buck in worsening market conditions?
Below we discuss three strategies that investors could employ while waiting on a bull market reversal.
Strategy 1: Go Long on Crypto-Startups with Real World Partnerships
Investors may need to re-adjust their expectations and allocate a certain percentage of their portfolio toward long picks. Of course, the cryptocurrency market is fast paced, high risk and possibly better suited to day traders in 2018, but a small selection of coins that one is willing to wait 2 to 5 years on might not be the worst idea.
Given the inherent volatility of cryptocurrency, it’s probably best to select cryptocurrencies that have solid partnerships with established industry players that are more likely to bear fruit over the long term.
Companies like IOTA, Ripple (XRP), GoByte (GBX), IOST and Stellar Lumens (XLM) are likely contenders.
Currently, IOTA has partnerships with Volkswagen, Bosch, Fujitsu and DNB ASA. Ripple (XRP), while contentious among many circles, remains a top 5 cryptocurrency with powerful partnerships and multiple use cases worldwide.
GoByte Network has partnered with iVend and is well positioned for the growing crypto-payments sector. Currently, revenues from e-commerce and mobile payment processing gravitate near $530 billion and the sector is expected to rise to $886 billion by 2021.
IOST develops blockchain infrastructure that serves as a bomb proof solution to the scalability issues commonly faced by Ethereum and Bitcoin. Their blockchain is fully capable of meeting the enterprise level needs that a company like Amazon or AliBaba might need and they have an impressive array of investors and partnerships. At the moment IOST price is possibly the most attractive it’s been since 2017.
Stellar Lumens is quite similar to Ripple (XRP) except for the fact that it is less centralized, has its own exchange and also recently launched a decentralized exchange where each token and ‘tether’ is paired with XLM. Stellar Lumens also has an array of impressive partnerships with IBM, Shift, Deloitte and Stripe to name just a few.
Strategy 2: Take a Break and Let Robots Handle the Trading
Instead of focusing on 50 to 100 percent gains and attempting to time the market, investors could go for the low hanging fruit and let robots do all the hard work. Most cryptocurrencies fluctuate at least 1 to 2 percent daily and trading bots could easily cover this for investors 24-hours a day 7-days a week.
To date, Gekko, Zenbot and Crypto Trader are the most popular, but traders could also have a look at some of the newcomers like Cryptohopper, Gunbot, and Haasbot.
Strategy 3: Run a Masternode to Maximize Returns while Accumulating Extra Coins
Instead of investing one’s full attention to trading, investors could also consider operating a node as this provides the opportunity to earn passive income in the form of extra coins, while also remaining positioned to benefit from the price appreciation of staked coins.
While operating a masternode tends to require a hefty initial investment, operators are rewarded with block rewards (tokens) of whichever cryptocurrency network they are supporting. Most operators are compensated with 5 to 20 percent of a block reward and these ‘rewards’ are meant to help compensate operators for the cost of running the node.
While operating a node in 2017 required a treasure trove of capital, this year’s bear market has significantly reduced the cost and the opportunity to earn passive income on a cryptocurrency investment is worth considering. Node operators can hodl, exchange or sell their block rewards on any number of cryptocurrency exchanges and GoByte (GBX) is currently one of the most affordable cryptocurrency to operate a masternode.
GoByte CEO, Hisyam Nasir believes that operating a masternode has multiple advantages, even when run during a bear market. Nasir points out that “Printing coins allows operators to save on cost and this could potentially be more effective than just hodling.”
Nasir also explained that,
running a node is great in a bear market, because you are printing new coins to offset downturns in price. This is much more effective than hodling depreciating coins that don’t offer rewards.”
While there are are list of great cryptocurrencies that one could take a stake in, GoByte already has a firm foothold in e-commerce and mobile payments. Not to mention, the sector is slated to grow to represent 46% of the global e-commerce market by 2021 and a recent report found that 40% of survey participants with some cryptocurrency awareness would be content to use it for everyday purchases.
While nothing is a given, it is relatively sensible to surmise that as more vendors accept crypto-payments, GoByte token (GBX) will appreciate in value, thus making the operation of a masternode extremely lucrative.
Currently, the cost of operating a GoByte masternode is a one-time investment of 1,001 GBX and potential investors can visit https://masternodes.online/currencies/GBX/ to learn more about the process. At the time of writing, the cost is roughly $890.00 and hosting is merely $1.21 to $5.00 per month.
Smart Investors will be Ready for 2019 with a Multi-Level Investment Plan
2018 has been an incredibly rough year for cryptocurrency and unless one shorted the market it’s hard to argue against that observation. While the world’s top analysts are dead set in their belief that cryptocurrency prices will moon in 2019, nothing is a given and 2018 taught plenty of investors of the dangers of making cryptocurrency assumptions.
Investors and traders, whether long or short, need to have a multi-pronged strategy and the strategies mentioned in this article could be a fantastic starting point. Investors must retain a long vision for this nascent sector.
Blockchain adoption and partnerships between crypto-startups and established international companies are on the rise. Centralized exchanges are nearly finished completed investment platforms and services that have already attracted some of the biggest institutional investors. Meanwhile, decentralized exchanges are also popping up left and right and this new wave of peer-to-peer commerce is likely to draw in more retail investors looking to exchange and use their cryptocurrencies.
Going long on some crypto-startups that have these promising partnerships should be a step every investor considers. Furthermore, new technologies that can handle the more tedious parts of trading are readily and freely available so don’t be afraid to let the robots take over!
Also don’t forget that the e-commerce and payments sector is bound to continue growing, and as this occurs revenues from e-commerce and mobile payment processing are expected to rise significantly. Surely the wisest short and long-term move for investors would be to ensure they can catch this wave by investing in a node as this is proven to provide passive income while also allowing operators to benefit from the price appreciation of staked coins.
History has shown that the early bird nearly always gets the worm and with cryptocurrency valuations near 2018 lows this might be the best time to deploy well thought out investment strategies.
What are your thoughts on these strategies? Share below!
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