The unstable macroeconomic environment and the Terra collapse triggered a deep crisis in the cryptocurrency industry. The negative momentum was amplified by problems of large companies on the brink of bankruptcy.
CoinEx — a exchange that endured the 2018-2019 crypto winter and became part of the ViaBTC Group ecosystem. Together with the platform we discuss three ways to earn in a bear market.
Short positions in the futures market
Short — a position to sell a financial instrument, which allows you to profit even as the market falls.
How does this work? The user borrows an asset from the exchange and sells it at the market price. When the asset declines, the trader buys it back and returns the debt at a lower price.
They earn from the price difference — selling on the open market and buying to repay the loan.
When opening a short position, always pay attention to potential losses: they are unlimited, and profits are limited to zero.
Losses can be minimized with a stop-loss — an order that automatically closes the position if the price moves into loss territory.
Additionally, consider:
- funding rate — the difference between spot and futures prices. Depending on it, users pay or receive compensation for open positions: with a positive rate longs pay shorts, and with a negative rate — the other way around. The mechanism aims at price parity between markets: this is how traders tend to close and reopen positions;
- probability of a short-squeeze — a rapid price rise when there is an excess of short positions on the market. Their liquidations create additional demand and push the price higher. Short squeezes are a common phenomenon in illiquid markets.
Historically all markets, including the cryptocurrency market, tend to rise. However, the absence of stop-losses and trading with high leverage can lead to the liquidation of a position once bears exit the market.
Passive income
If you don’t want to risk money on the futures market, you can invest with a small, stable yield to accumulate cryptocurrency and prepare for a new bull cycle.
The most common tools for earning passive income:
- flexible and fixed deposits. The platform uses funds to issue loans and pays holders a portion of profits as a reward. Returns depend on the marketplace and demand for lending services;
- liquidity pools on decentralized exchanges like OneSwap. Participants receive rewards for providing liquidity in the pool’s currency. Returns can be very high, but volatility and low liquidity of many tokens can reduce real profits in the long run.
Deposit services are widely represented in the crypto market. They are provided by lending platforms, crypto-finance companies and centralized exchanges.
CoinEx users can borrow funds for margin trading via a specialized финансовый аккаунт and add liquidity to the pool автоматизированного маркетмейкера (AMM).
In the first case they receive a fixed income: at the time of publication, the 7-day APR of the Tether lending is 2.36%. In the second — they share 50% of the trading commissions of AMM users.
Ambassador programs
They are typically launched by projects that want to build a community around their products and services.
The main requirement to participate is having an audience on social media. Ambassadors spread information about the company and receive rewards: a share of referral commissions, a salary, or payments for content — educational videos, explainers and memes.
“Ambassador programs are one of the reliable ways to earn money in a bear market. You get paid for sharing your experience trading cryptocurrencies, and your earnings depend not only on the number of referred users. Many platforms pay users for creating useful content or helping to organise user events”, says the CoinEx team.
Ambassadors in the CoinEx program receive up to 50% of the referred users’ trading commissions for an unlimited period. The amount of the reward depends on the trading volumes of the referrals.
Additionally, until October 25 on the platform there is a futures program: ambassadors receive up to 60% of referral commissions, as well as funds to trial-trade futures and CoinEx merch.
To join the futures program, users must:
- sign up on CoinEx;
- apply on the амбассадорской программы page;
- fill out the form and enter the referral code futures.
After approval, CoinEx will send an email with detailed instructions for ambassadors.
Conclusions
The crypto industry offers various ways to earn — from active trading on spot and futures markets to passive income in lending services and DeFi protocols. The relevance of many of these options will rise with the onset of the bear market.
Futures trading will suit more experienced traders, while investing in financial products and earning passive income is accessible to beginners as well.
Influencers can monetize their social media presence — participate in ambassador programs and earn rewards for content.
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