While many cryptocurrency investors believe that the only way to earn on crypto is when the prices of digital assets rise, several basic crypto trading strategies can assist experienced traders to help them make money when crypto goes down. One can utilise an automated cryptocurrency trading platform or employ various manual trading methods to implement such strategies.

Regardless of your trading method, it is possible to mitigate losses, even if you maintain long market positions in your portfolio. Is it possible to make money when crypto goes down? Let's discuss how to choose the right crypto-selling strategy and how to profit from the crypto crash.

Why is cryptocurrency falling?

Before discussing basic crypto trading strategies and how to make money when crypto goes down, let's find out: "Why is crypto going down so much?"

The crypto market is experiencing a significant decline due to various factors. The main cause is the unprecedented macroeconomic conditions that have led to recessions in many developed countries and the implementation of high interest rates to combat inflation. As a result, high-risk assets like stock markets and cryptocurrencies have faced substantial downward pressure.

Moreover, 2022 witnessed some major crashes in the crypto industry, such as the collapse of the Terra-Luna ecosystems and the bankruptcy of several well-known companies, including Three Arrows Capital, Celsius, FTX, and BlockFi. These events have resulted in the loss of billions of US dollars for customers and have damaged trust in the broader cryptocurrency space.

Furthermore, governments worldwide have been increasing their regulatory efforts on the crypto industry. Various concerns, including financial crimes and money laundering, drive this crackdown.

These combined factors have created a perfect storm for the crypto market, leading to its crash. However, it is crucial to recognise that this may only be a temporary setback and that the crypto market will eventually recover.

The crypto crash is an opportunity to earn money

Can you earn money from crypto when the price falls? For seasoned traders with a keen understanding of price dynamics, any market movement offers a potential avenue for earning with crypto. Investing in declining cryptocurrencies might seem unappealing, as it doesn't yield a profit when taking a long position in the market.

On the contrary, opting for a short-term trading strategy (a downward trade) enables you to make money even in a robust bearish trend. The deeper the market plunge, the greater your potential earnings.

How does "shorting" work?

• Securing a loan from a broker is necessary to initiate a short trade. This opportunity is available when using an account for margin trading.
• The borrowed assets are promptly sold on the market at the prevailing price.
• If the price decreases, the position is closed after repurchasing the assets at a lower price, and the assets are returned to the lender. The difference constitutes your profit.
• If the price increases, you must repurchase the assets at an elevated cost and repay the debt to the lender, resulting in a significant loss.

Short-term trading opposes the long-term one, where you buy an asset at the current price, anticipating its value to rise. In employing a trading strategy centred on bearish trends, the goal is precisely the opposite: anticipating a market downturn.

These positions, often termed 'short,' have an expiration date, unlike long positions. Holding open a short position requires payment of a small commission to the broker or centralised exchange. Additionally, the lender may demand a small percentage for providing the loan. Ongoing transaction costs necessitate careful consideration when selecting short positions.

Another method to make money when crypto goes down is spread trading:

• Select two assets from the same class, for instance, tokens of EVM-compatible networks ($ETH and $AVA).
• Create two trades in opposite directions, with the selling price slightly lower than the buying price.
• If $ETH begins to rise, $AVA typically follows suit. Selling $ETH and buying an equivalent amount of $AVA establishes a spread between the purchase and sale prices.
• Upon the price of $AVA aligning with $ETH (by volume), liquidate the position and simultaneously repurchase $ETH at the sale price.
• You've now profited from the difference between the two prices, with the only loss being the commission paid to the broker or CEX platform. Experienced traders well-versed in the digital asset market commonly employ such strategies for earning from falling cryptocurrencies.

What other trading strategies for crypto can you employ? Let's delve into basic crypto trading strategies during bearish trends or periods of heightened market volatility.

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Short-term strategy

One way to make money when crypto goes down is by employing a strategy called "shorting." This strategy involves borrowing and selling cryptocurrency when the price drops to generate a profit.

Shorting is a trading technique that can yield profits regardless of whether the market is rising or falling, but it comes with risks. By betting on a price decrease, there is a possibility of being burdened with debt from the borrowed cryptocurrency if the price continues to rise.

To short cryptocurrency, you can borrow it from other users on an exchange, sell it, and then repurchase it when the price declines. Conducting thorough market research and comprehending the associated risks before engaging in shorting is vital.

Moreover, knowing the fees involved in shorting is crucial, as borrowing and selling cryptocurrency may entail higher costs.

Buy during drawdowns

A market price collapse isn't necessarily a disaster for all investors; many seasoned traders view declining prices as an opportunity to make money when crypto goes down. The potential for significant growth following a downturn can be substantial, often reaching several hundred per cent, depending on the specific asset in question.

For instance, in December 2013, when $BTC achieved its all-time high at $1800, it experienced a 40% drop by mid-month. Those astute to the industry's dynamics recognised the potential for remarkable gains in Bitcoin and acquired tokens at a relatively lower price. Just a few months later, the $2000 threshold was surpassed, and over subsequent years, the price soared to several tens of thousands of US dollars per 1 $BTC.

Conducting a fundamental analysis of a project aids in identifying how to profit from a crypto crash. Ethereum, for example, remains an intriguing blockchain asset due to the anticipated expansion of EVM (Ethereum Virtual Machine) technology and the launch of new DeFi platforms leveraging the technological foundation of the Ethereum blockchain network.

Investing in assets with lower prices currently stands out as one of the most effective strategies to make money when crypto goes down, particularly for those who believe in the cryptocurrency market's long-term prospects.

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Day trading coins with high volatility

Day-trading on rapidly increasing altcoins can be lucrative for crypto traders seeking additional ways to make crypto earnings. Altcoins, alternative cryptocurrencies to Bitcoin, can be exchanged for Bitcoin or other cryptocurrencies. The prices of these coins can rise and fall rapidly, making day trading on them potentially profitable.

To be successful in day trading on fast-rising altcoins, it is crucial to conduct thorough research and stay updated on the market. Familiarise yourself with the fundamentals of cryptocurrency trading and different types of altcoins. Stay informed about significant events that may impact the coin prices by following the news. Recognising the risks associated with day trading on volatile altcoins is also essential. Although these coins can provide substantial profits, they can also lead to significant losses. Managing risk requires having a well-defined plan, such as implementing a stop-loss or taking profits at specific levels. Consider the time commitment required for this investment strategy, including analysing market charts.

Lastly, it is essential to remember that day trading on fast-rising altcoins is not a shortcut to instant wealth. While there is potential for substantial profits, substantial losses are also possible. Like any investment, thorough research, understanding the risks, and making informed decisions are essential.

Trading against the trend

To trade against the prevailing trend, it is crucial first to identify the trend of the asset. This can be done by referring to a higher time unit chart rather than the chart corresponding to your trade's time unit. This approach is followed in one-way trading. If the trend on the higher time unit chart is bearish, you should only consider bullish signals on your trade chart. Conversely, if the trend is bullish, you should only pay attention to bearish signals on the trade chart.

Opening a position against the trend should only be done with clear signals. The decision to open a position should be based on objective reasons rather than subjective opinions. The signal can be derived from an indicator or the price chart. In both cases, it is essential first to identify a signal on the higher time unit chart and then look for a buying or selling opportunity on the trade chart. The same detection tools can be used on a higher time unit and trade charts.

Create content about cryptocurrencies

In addition to investing in cryptocurrency and using basic crypto trading strategies, many individuals use content creation to earn on crypto. Content creation encompasses various forms, such as videos, blogs, and other educational materials to inform potential investors about the cryptocurrency market. Content creators can be rewarded for their efforts in either cryptocurrency or conventional currency.

Content creators can earn money in crypto through their work and contribute to educating others about the cryptocurrency industry and increasing awareness of its potential. Content creation effectively takes advantage of the cryptocurrency market's potential, even during market decline.

By possessing the proper knowledge and exhibiting dedication, content creators can generate income while promoting cryptocurrency awareness and making the cryptocurrency industry more accessible to everyone.

Tips and Conclusion

The crypto market is known for its unpredictability and fast pace. Market sentiment can shift rapidly, and trends can emerge and fade within weeks. It's crucial to stay informed and closely observe events that can influence the direction of the crypto markets to make money when crypto goes down.

Maintaining curiosity and staying updated about cryptocurrency trading trends can position you for success even during extended market downturns. This environment may offer substantial potential for gains, particularly compared to investing at market peaks when sentiment is typically overly optimistic.

Even in a bearish crypto market, skilled and disciplined investors, traders, and content creators can still find profitable opportunities through trading strategies for crypto like short-selling, day trading, or alternative methods such as content creation.

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