How to Make Thousands of Dollars When Bitcoin Is Falling
Bitcoin year to date is down -16.69% according to CoinDesk. There’s a lot of people who think this drop could continue. So here’s how to make money if Bitcoin continues to drop. Just to quickly mention if you bought some type of crypto whether that be Bitcoin, Ethereum etc. for the long term then you shouldn't sell. If a drop like this is causing you to want to sell then you don’t have enough conviction in what you’re buying. No matter what happens in the next year or two whether Bitcoin drops another 50%. I still believe within 5 years it will be significantly higher than it is right now. Make sure not to sell your long-term holdings just because Bitcoin is dropping right now. Only use your trading portion of your portfolio to make money during this drop.
Method #1:
The first way to make money from Bitcoin dropping is to simply short Bitcoin or other cryptos. There are a lot of exchanges that you can do this on, personally, I use Bybit (my referral link). When you sign up for Bybit or another exchange you can short crypto in two main ways. The first is by using spot trading and buying leveraged tokens. With leveraged tokens, there's no liquidation price so you can buy a 3x short Bitcoin token. You can search up “BTC3S/USDT” and buy that token.
If Bitcoin goes down by 3% on the day then you would get a 9% gain. The only thing to consider is don’t hold leveraged tokens for long periods of time because there are things like slippage which can affect your gains. But the good thing about leveraged tokens is there’s no liquidation price as opposed to futures. Futures is the second way too short Bitcoin or other cryptos. Futures are also available on Bybit. Essentially with futures if you enter a $100 position and are on 20x leverage your position becomes a $2000 position. So if Bitcoin drops by 1% rather than a 1% gain you get a 20% gain. There is much more potential for big losses if you’re not careful and you also have a liquidation price. If your short position hits your liquidation price you lose all your money in that position. If you want to hold a futures position for a bit longer than usual you can set your leverage really low (under 5x) that way there’s a lot less risk of liquidation. I’ve gotten some pretty decent gains from shorting cryptos (as shown below).
Method #2:
The second method to make money when Bitcoin is falling is through stocks. Let’s say you don’t want to sign up for a crypto exchange, you can short Bitcoin mining companies such as MARA or RIOT. These cryptos follow Bitcoin very closely.
The chart above shows Bitcoin and the orange line is MARA overlayed onto it. As you can see it’s basically an exact match in terms of the direction. The only difference is if Bitcoin goes up 100% then MARA is most likely up double or triple that. So it acts almost like a leveraged position on Bitcoin. If you were to short MARA you could make money when Bitcoin goes down. If you live in Canada you could also buy BITI which is an Inverse Bitcoin ETF. When Bitcoin goes down BITI is up on the day.
Method #3:
Another way to make money when Bitcoin is dropping is to mine Bitcoin. The best time to mine Bitcoin is when crypto is dropping. The reason for this is because you get a certain amount of Bitcoin a day. Let’s say you mine 1 Bitcoin right now when Bitcoin is around $40,000. You didn’t make $40,000 you made 1 Bitcoin. So when Bitcoin goes back up to $60,000 and you sell you make rather than that original $40,000, it’s actually $60,000. When crypto is down is the best time to mine since then you can stack up a lot of crypto and sell when everything is up. Obviously, the costs of mining are very expensive but it’s an option of something you can do when Bitcoin is falling.
Method #4:
The last method I’m going to talk about is staking. Essentially with staking, you can take your Bitcoin, USDT or other cryptos. Lock it up for a certain amount of time and get interest on the crypto. If you want less risk you can stake stable coins so even if the crypto market drops you can still get a good yearly return. There are a lot of ways you can do this one way is through Anchor Protocol where you can nearly 20% APY through staking UST.
Those are some ways you can make money when Bitcoin is dropping. Thanks for reading and follow for more articles like this.
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