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Keep the Investment Trickling up the Bear

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@tarazkp
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5 min read

With the markets struggling a little today, I think it is good to have a look at what might be possible for the future. Some people I have chatted with are feeling a little bearish at the moment based on current market conditions, but it is good to remember, that the entire economy is facing some uncertainty on the back of rampant inflation and interest rate rises. People are always looking for a "sure thing" but it just doesn't exist, so thinking about what is possible to do in order to mitigate risks, is useful.

I can't speak for anyone else, so I just look at things from my perspective and see what are my own potential areas of focus. In the past, the way to secure gains was to sell into fiat at the highs and hold until the depth of the bear to buy back. This is still possible of course, but it comes with its own risks, with the major ones being that the markets turn upward and the other two being (in my opinion) leakage that reduces held capital and then, failure to find a buy in point.

These are all quite common and the last one especially so, where people "intend" to buy at the lows, but since they are lows, they hope for lower. As the price increases, for example from 10 cents to 15 cents, it is then 50% higher than it was, so they wait for it to fall back - but at 12 cents, they still want 10 again, so when it rapidly moves to 20, they are now having to decide to buy 50% less for the same money. This is why programmatic or laddered buying is a good way to cost average in, especially favoring the lower end buys with larger amounts.

For me, the strategy is pretty simple, as I do not like trading daily and I tend not to be a large seller, even at the highs. So, what I want to do (assuming the bear is "just around the corner") is to take a strategy that involves making available income continuously in some form, regardless of market conditions. If it crashes, I will at least have some trickles to buy more weekly, bi-weekly or monthly and if it increases upward rapidly, I will have a enough tokens to both take in yield and, ladder out into stables or some other asset if I choose. I never want to be caught at the top with no assets, nor do I want to be caught at the bottom again with no way to buy.

The biggest problem with this approach is psychological, as regardless of what happens, there will probably always be that worrying that I missed the opportunity to sell high and I will need to endure a long bear period. However, a long bear period is actually relatively short in the grand scheme of things but the worst part of a bear, is not being able to take advantage of the lows. This is where I was most of the last bear due to circumstances, so couldn't buy in nearly as much as I will in the future under similar conditions.

As said, this is my approach generalized, and everyone should consider and buy-into their own version, but it is (again in my opinion) important to have some level of commitment, but leave room for adjustment as new information comes to light. The markets rapidly fluctuate, but the industry in general is also rapidly expanding, which means it is hard to stay abreast of all the things that are going on across the many, many projects out there.

However, while the common advice is to diversify assets, it is probably important to consider the likelihood of what is actually going to work, rather than firehose every possible project in the hope for moon. For me, that means the projects I use will take the majority of my investment, because I take the position that if I am using them, others will too. I tend to invest into what I believe in, rather than what could moon.

This changes occasionally, but normally, it only gets added to, where I start to put more investment into something with potential, but keep my stake in the things that still have potential. This is why for example that I still have my HIVE stake and liquids, but also have been expanding more heavily into Splinterlands over the last six months and RUNE for a little longer. Both of these investments have the potential to offer trickles of income in the bear market in various ways.

These trickles at the bottom of the bear might be insignificant, but if you consider it from the HIVE perspective, those small amounts can add up. For example, if a person was able to put in 10 dollars a day (on average) into HIVE in January, that it would have amounted to about 2500 HIVE - which currently has a value of $3500 dollars. It would also have attracted around about another 10% in curation so, 350 dollars and, 3% in interest for another $100 worth. Yes, there are better rates out there for many things, but that is a significant amount of gain. If we were to return to that 12c average price, having trickles to buy at that point can add up to some quite extreme gains in the future. That is HIVE as an example, but of course there are others too, for example buying 10 dollars worth of RUNE to stake at the lows and earn some more while waiting for the highs.

Ten dollars doesn't sound like much of anything and in this country, it doesn't even buy me a discounted work lunch, but at the bottom of the bear, it adds up. However, transferring 300 dollars into crypto from fiat every month tends not to happen that often as life gets in the way and there is that "one-off" expenditure that tends to happen every month to reduce or stop the deposit, not to mention the fees to transfer in. Having that available income already in crypto however, makes it far more likely that decisions to invest more will be made, rather than extract.

For example, I don't use crypto to buy anything in real life, but I do use it to buy assets in crypto life. This means that for example, while I "umm and aah" about whether to buy a new PC, the cost of many new PCs will easily go into Splinterlands assets to strengthen my foundation for the future. The PC I need, will be covered by fiat earned IRL, as if crypto doesn't exist.

Not everyone sees it this way of course, but as said, we have the power to make our own decisions on the approach we take and this is mine. Sure, might miss some big payouts, but I am "quite bullish" on crypto, so it just becomes a matter of time that my foundation is strong enough and I can start taking some profits, much like a business owner who is building the business by investing gains back into it, rather than extracting too much for a living wage to include luxuries.

Right, so that is a bit of an overview of my thinking on this at the moment, but I am always interested to hear how others are looking to "secure the bear" for themselves. I think that whatever approach we take, we have to think about how the economy of crypto has changed to factor in the new tech possibilities and whether the bears of the future will be as deep or as long as the past.

In my thinking, because more people are taking "hybrid" approaches similar to me and there are far more people in and developing the industry, the floor prices will be higher and the development will keep attracting new participants, so bears won't be as deep, nor as long - so I will keep an approach where my investment keeps trickling up regardless of the market.

As always, time will tell.

Taraz [ Gen1: Hive ]

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