• The price of gold fell below $45,000, the lowest level since August last year.
• DCA is an investment strategy to lessen market volatility.
• DCA Strategy earns high interest income from digital assets inactive.

ByRaymond Hsu, Cabital’s Co-Founder and Chief Executive Officer

FOMO/FUD are two of the main reasons crypto markets can become volatile. These low prices should be taken advantage of by investors. They must also adhere to a DCA strategy and make high-interest income with their digital assets.

For everyone who has crypto, it’s been an uphill start to 2018.

The Federal Reserve’s indirect hints of future rate hikes in addition to reports claiming that India and Russia would completely ban cryptocurrency trading and mining threw the emerging digital asset industry into a spiral.

Bitcoin dropped below $45,000 for the first time since last August and Ether lost over half its value from it’s all-time high at one point earlier in the year. According to CoinGecko data, there was $500 billion in cryptocurrency withdrawals in January.

CoinGecko source

Unfortunately, people feel as though they have been burned. 2021 is going to be known for mass adoption and institutional interest in cryptocurrency. Who can blame them? The crypto market is impacted by many factors, including interest rates and upcoming regulations. New innovations are also being made and institution adoptions.

Source: Ey.com

There isn’t one single person that can take the blame, so what I prefer to do is ask myself how to play this market dip? It’s the age-old question: Should you hang on to your life (HOLD), sell the dip or run in panic, and then lick your wounds. Here’s what I believe are some of the best strategies to thrive in a bear crypto market, which we call in the industry, a crypto winter.

Dollar-cost averaging (DCA)

DCA (Demand to Control Amount) is an investment method that seeks to minimize market volatility. It involves investing a fixed amount every week, such as $100 in bitcoin each two weeks. And it’s not unique to digital assets — traditional investors in equity and debt markets have been using DCA for decades to endure stock market volatility.

It is important not to make a lump sum investment in asset prices that is too late. If you invest in the highs and lows of the market, your overall investment will be worth it.

You can use the DCA strategy to invest on various crypto exchanges or wealth management platforms. It includes an automatic recurring purchase. Simply choose the asset that you would like to invest in, enter a purchase amount and select whether you’d like to do so daily, weekly, monthly, or annually.

The market may continue to decline, which you might be right. The DCA strategy will allow you to capture all the lows. This makes your DCA much lower than if it were a single buy.

An example case from a large American cryptocurrency exchange shows us how DCA can be an effective investment strategy for a long time. Let’s look at from October 2018 to May 2019. Litecoin saw volatility during these seven months. It fluctuated between $22.95 & $114.86 per coins.

Now, imagine if you were to create a DCA recurring order for $200 in Litecoin starting October 15, 2018. You would then have purchased $1,600 of Litecoin by May 15, 2019. You would make a $1,608.02 profit if you had sold your entire Litecoin portfolio.

The DCA strategy would make you almost 500 less profit if the same amount ($1,600) of Litecoin was purchased and then sold on the 15th of October 2018. DCA is a good strategy.

High-yield passive income from stable coins

Inflation is rampant, with the U.S. reaching a 39 year high of 7.7%. Investing in stable coins to a crypto savings platform and earning up to 12% per annum can help you hedge against it. It also allows you to build your crypto portfolio at a low price.

In order to reduce volatility, stable coins have been created. If created correctly, stable coins can be effective units for storing value as well as a medium for exchange.

Because they can be backed with real assets such as U.S. dollar, Treasury notes, and real estate, stable coins are highly in demand. To generate high-yield passive income, you can also use stability coins like USDT and USDC for depositing into cryptocurrency savings accounts.

You will be extremely pleased to have staked your stable coins once we move into the next bull market. Your portfolio will soar.

Don’t be tricked into FOMO and FUD

It is vital to stay up-to-date with the most recent news in cryptocurrency. However, too many information can lead to confusion. In bear markets it’s easy to allow your emotions take control and make purchases that you cannot afford. Although buying the dip is fun, credit card fees can add up. And let’s be honest, nobody knows when the dip will end.

The feeling “fear of missing out” (FOMO) and “fear, uncertainty and doubt” (FUD) are common terms in the crypto space, but those emotions need to stay in check. FUD and FOMO can be powerful emotions that influence how you invest. They could also throw you off-track from your long-term financial goals.

Don’t forget that no one can forecast the future 100% accurately. And nobody’s advice is perfect. No one knows all. So, it’s best that you do your own research before you come to an investment decision and always stay calm, cool, and collected.

FOMO/FUD is one of the main reasons crypto markets are so volatile. However, institutional investors who are able to plan for the long term will be able over time to keep their bottom lines in bitcoin and other cryptocurrencies stable. But that’s just the beginning. For now, retail investors will need to be able to weather any storms and stay true to the strategies that have proven successful.

Don’t let this bear market overwhelm you. They are always changing. You can take advantage of the low prices by sticking to your DCA strategy and earning high-interest income with your inactive digital assets.

Most importantly, stay patient and positive – after winter always comes spring.

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