How to Protect Your Portfolio During a Crypto Bear Market
The price of crypto assets declines by up to 20% from an all-time high during a crypto bear market. The decline is followed by long weeks and months of a continuous downtrend. Get-rich-quick opportunities are rare in bear markets, and little mistakes could result in huge losses.
Hackers are more active during the bear markets, targeting existing projects and building scam coins to rug pull on unsuspecting investors. A lack of proper understanding of the indicators of a bear market may also complicate a crypto user’s situation.
At the same time, a crypto bear market is filled with genuine projects building new ideas to resolve difficulties in the market. Ideas like Yield Farming and Yield Aggregation started in a bear market, so innovation is something to look out for.
If you have managed to build your portfolio in a crypto bull market, you should do the following to protect it. Protecting your portfolio will help you emerge with your bags full from a crypto bear market. Here are the top steps to protect your portfolio during a crypto bear market.
Research Before Investing During A Crypto Bear Markets
To succeed and protect your portfolio in a bear market, you must hedge by looking for new opportunities. Finding new opportunities, however, does not guarantee success in crypto. Make sure the project you invest in is not a scam created to trick investors out of their hard-earned money. The top thing to watch out for in a project is its founders. If a project has a founder who is not on LinkedIn or other social media platforms, please do not invest.
Also, stay away from projects whose founders prefer to remain anonymous. Everyone providing a great and honest solution is always happy to identify with it. Shady founders are the biggest red flag so check thoroughly. You can visit smart contract auditing reports on official project websites to confirm that the company has audited the projects. Certik, Hacken, Quantstamp, Consensys Diligence, and Trail of Bits are the most popular auditing websites. Pandora is proudly audited multiple times by Hacken.
Diversify Your Portfolio
Additionally, it would help if you had a great strategy and deployment platform to diversify your DeFi portfolio. Pandora alone has stablecoin pools paying reasonably well and other farms in the native PSR and PAN tokens. Pandora’s native tokens yield is some of the highest in the DeFi space, with over 100% APR on tokens staked. Pandora’s fair user-level system also rewards users for using Pandora. You can increase your chances with more opportunities by using Pandora often and earning EXP.
EXP-yielding activities include hashrate-eligible trades, DroidBots upgrades, NFT trading on PandoMarket, buying tickets, unlocking staking slots, and opening PandoBoxes. Check out the Pandora Launchpad if you would love to invest in upcoming projects with proven solutions and committed teams.
The launchpad is a platform where some of the brightest ideas receive support to get started. Pandora has also launched Pandora NFT Securities, the first unique, flexible, stable investment asset backed by institutions in the DeFi space. Pandora Securities are flexible and pay up to 12% APR with rewards claimable anytime and paid every second.
Stay on DEXs
The bear market can get tough, and centralized platforms often struggle to keep their businesses afloat. With user funds in the custody of exchanges, the temptation to divert them to other purposes is high. Most exchanges end up borrowing too much with user funds leading to a need for more assets to process withdrawals. Such situations can be messy, especially if you have stored more funds than you can afford to lose in a swoop.
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Unlike centralized exchanges, DEXs like Pandora give you full control over your funds and ask for your permission before processing transactions. You retain full custody of your assets, even though you can transact as much as you want from anywhere. DEXs also lets you combine the extra security offered by non-custodial wallets such as ledger, Safepal, and Trezor. Using these wallets can add an extra layer of security for your crypto assets.
You only need to install a Web3 wallet extension to use Pandora. After that, you can transfer your funds to the wallet and connect the wallet to the DEX. There are no such long processes as KYC/AML requirements as you have on centralized exchanges. You can interact safely and explore investment functionalities on DEXs without founder or auditing issues.
Spot Genuine Projects With Innovation Like Pandora
Aside from using a DEX, always ask yourself what is in the DEX for you. Knowing what you get from a DEX will help you stay on the right platform. There are so many DEXs out there that selecting the perfect one could take you down a rabbit hole. The first way to spot a great exchange is its smart contract. You can check on the project’s founders and see if the smart contracts are audited.
Subsequently, it would be best to look at the community to see what they are getting out of using the project. The best exchanges are transparent, secure, and working to provide innovative solutions to help users grow. Pandora is one of those exchanges committed to constantly innovating to remain useful and relevant in users’ daily lives. Pandora exchange satisfies quality security and other requirements dedicated to rewarding users while offering a truly decentralized experience.
Know When The Downtrend Is Over
Technical and fundamental analysis can help you spot indicators of a bear market as a professional. You need some knowledge of these to stay safe investing in crypto. According to the news, fundamental analysis will help you move in and out of investment positions.
Again, you can keep a part of your portfolio in stablecoins using market insights. Technical analysis gives you information about the current market sentiment following an event. A falling wedge pattern could result in a bullish breakout, marking a continued uptrend’. A breakout from a rising wedge is often a bearish sign. In response, you must liquidate some positions and move into more stable investments like Pandora Bond NFTs.
Conclusion
Protecting your portfolio may seem hard, but it is the most important tool to help you survive in a bear market. Making money from low-cap crypto or other endeavors outside crypto is great. Many people make so much money in crypto but lose it all along the way.
Combining technical and fundamental strategies with personal due diligence is the best way to protect your portfolio in a bear market. Curious to learn more about Pandora and what is so special about us? You can read the documentation to learn more and start your journey to financial freedom.
These materials are for general information purposes only. They are not investment advice, a recommendation, or solicitation to buy, sell, or hold any digital asset or engage in any specific trading strategy. Some crypto products and markets are unregulated, and you may not be protected by government compensation and/or regulatory protection schemes. The unpredictable nature of the crypto asset markets can lead to loss of funds. Tax may be payable on any return and/or on any increase in the value of your crypto assets, and you should seek independent advice on your taxation position.
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