As prices take a downfall in the crypto market, crypto expert Will Woo shares ideas as to how one can manage their investment in a bear and bull market to mitigate the losses and amplify the gains.
“Trend is your friend”
Yesterday, Bitcoin took a drop and fell to $6,250 from the $6,600 level. As happens in the crypto market, altcoins fell in tandem with Bitcoin but at a much faster speed. Where Bitcoin was down by about 4 percent, top altcoins were down by 8 to 12 percent while the highest loss was by 15 percent.
So, when bears hit the market, how exactly one can ensure that losses are kept to the minimum. Crypto analyst, Will Woo shares on Twitter:
“The trend is your friend. Alts amplify BTC movements. Once the bear is confirmed consolidate into BTC, you’ll lose less money. Once the bull is confirmed diversify into alts to capture the amplifying effect.”
Woo had commented this in response to the CivicKey CEO and General Partner at Multicoin Cap and Newtown Partners, Vinny Lingham’s Tweet regarding the same:
“In crypto bull markets you should diversify but in bear markets, you should consolidate. In bear markets, this means exposure to fewer coins, with more concentrated risk, but with bigger upside, lower downside over the cycle.”
Lingham added, “Yes, this does mean that Bitcoin is a good buy, relative to other coins, but could still have 50% downside, which would be less than other coins if the market tanked further.”
Will Woo further shared, “Fine print: Be careful and selective with alts, most will go to zero given enough time. They are the startups of the crypto world. If you don’t know what you’re buying you’re playing pass the parcel and hot potatoes.”
However, some did present the fact that altcoins are already 95% down, meaning they have bottomed making them a much safer and better option than Bitcoin. To this, Woo replied,
“Something that’s down 95% can go down another 95%. Risk-adjusted returns numerically crunched shows BTC as being higher than a basket of alts, thus will be higher than any randomly selected alt. If you have insight into that one particular alt, it’s a different story of course.”
And for diversifying to the stable coins in a bear market, he states:
“If you are okay with counterparty risk, yes. I’m sure the optimal strategy is BTC and USD with BTC component hedging a bank failure. Also most stablecoins are a trusted third party interface (stablecoin entity) into another trusted third party (bank).”
How would you manage your risk in a bear market and make the most out of a bull market? Share your thoughts with us by commenting below!