All financial markets experience different cycles and market conditions. Crypto and NFT asset prices can go through prolonged periods of bullish and bearish movements, they’re susceptible to dramatic swings.
The most dreaded market phase for crypto traders and investors is the bearish phase, but it can be an opportunity in disguise. Investors and enthusiasts may be worried, but you can find ways to make money in unfavorable market conditions.
The bear market isn’t limited to crypto and NFTs. It applies to traditional capital markets and describes a condition in which securities prices fall 20% or more from recent highs amid negative investor sentiment and pessimism.
Bear markets are often associated with the overall market or index, but individual securities and commodities can also be in a bear market if they experience a decline of 20% or more individually over a sustained period of time.
Stock prices generally reflect the expectations of cash flow and profits in the future. If growth prospects wane and expectations all, the price of the stocks may decline. This causes a ripple effect with fear, herd behavior, and a rush to protect losses, compounding the period of lower asset prices.
The concept of bear markets (downturn) and bull markets (upturn) are metaphorically named for the animals that inspire them and how they attack. Bears attack by swatting down at their opponent – downswing – and bulls attack by thrusting horns into the air at the opponent – upswing.
You’ve heard the phrase “buy low, sell high.” Bear markets are shorter than bull markets, often by a year, and they’re less statistically severe overall. If you’re in for the long haul, the prices during a bear market are a great time to buy stocks.
FTX is a cryptocurrency exchange built by traders, for traders. The exchange offers innovative products like industry-first derivatives, options, volatility products, and leveraged tokens. The platform is becoming robust enough for professional trading firms and simple enough for beginners.
The US FTX exchange features a maker-taker spot trading model. You can set a limit order as a maker and create a price for the transaction. As a taker, you can execute a market order, which completes the transaction at current market prices.
Along with offering crypto and fiat trading pairs, FTX also offers an NFT market where creators can mint NFTs for sale and buyers can purchase them.
One of the key features of FTX is that it has industry-standard security. The company externally backs up hot wallet funds and features cold wallet solutions. You also have FDIC insurance for funds held in USD, though not for crypto assets.
The team behind FTX comes from leading Wall Street quant firms and tech companies like Optiver, Facebook, Google, Susquehanna, and Jane Street. FTX has numerous partnerships and agreements, including stadium naming rights with the Miami Heat, the official exchange of Major League Baseball, and international rights with the Golden State Warriors.
OpenSea is among the world’s first and largest NFT marketplaces. Similar to eBay, Etsy, and Amazon, OpenSea offers an intuitive marketplace interface with unique digital collectibles in the form of NFTs. Users can buy, sell, or mint NFTs on the platform.
The company was founded in 2017 by software engineers Alex Atallah and Devin Finzer. After the launch of the NFT series Cryptokitties, the team saw the potential in NFTs to enable ownership of digital items and created OpenSea.
NFTs have been revolutionary, but buying, owning, and selling them wasn’t easy at first. OpenSea created an environment in which buyers and sellers could facilitate NFT sales and view ownership history quickly and easily. This had not been done before.
OpenSea is a peer-to-peer NFT marketplace, but it’s also a user interface layer between blockchain and everyday consumers, making it simple for first-timers to get into the market.
Ethereum is the most widely used network in NFTs, but because it saturates easily, people pay high transaction fees on the network. That’s why so many people choose Polygon or Solana, which are also accepted in OpenSea.
As of January 2022, OpenSea closed a $300 million USD Series C funding round led by Paradigm and Coatue, raising the valuation to $13.3 billion USD. The company isn’t planning an initial public offering (IPO) right now, but that’s a possibility in the future.
EOSIO is an open-source platform that provides industry-leading transaction speeds and a sub-second block time latency rate, allowing developers to complete transactions at a lower cost through efficient resource management.
The platform is also designed to allow a higher degree of configurability, which is valuable for the creation and management of programmable infrastructures. Architects can deploy public or private blockchain networks or implement a suitable default or custom governance protocol through smart contracts.
To secure the blockchain, EOSIO uses delegated proof-of-stake (DPoS). This system uses real-time voting and reputation to decide who can create a block on the blockchain. Anyone who owns EOS can help operate the network, but the more you own, the more preference you’re given. Each EOS token can be staked to represent one vote that can be used to support the platform’s development.
The platform was founded in 2017 by Dan Larimer and Brenden Blumer. The EOSIO protocol was developed by Block One, a private company. Larimer is a big name in blockchain developers, and in addition to EOSIO, he architected the first decentralized exchange, BitShares, and the first social media network for crypto, Steemit.
Axie Infinity is an online game universe that revolves around Pokémon-like creatures known as Axies. Players can collect Axies as virtual pets and use them to breed, battle, collect, raise, and build kingdoms.
The game is unique because of its pay-to-earn model, otherwise known as a pay-to-play-to-earn model. Participants pay the starting costs to play and earn the Ethereum-based in-game cryptocurrency. Participants can cash out tokens every two weeks.
In the Philippines, the prohibitive cost-of-entry led to the formation of gaming guilds, which rented out assets to allow players to get in on the action. As of June 2021, some people have been playing the game as a primary source of income in the Philippines.
One of the rewards tokens, Smooth Love Potion (SLP) is a reward token that can be earned by participants by playing in battle or adventure mode. SLP is an ERC-20 utility token that has value like other cryptocurrencies and can be bought and sold on a decentralized exchange.
Axie Infinity participants can purchase virtual land and other in-game assets as NFTs. As of November 2021, the record sale for a plot of virtual land was $2.3 million USD. The game was supposed to offer unique gameplay related to the purchased virtual land, but it’s been delayed. Users have complained about how this declined with the profitability of the in-game economy.
Shiba Inu (SHIB) is a dog-themed meme cryptocurrency named for a Japanese dog breed. It was created in 2020 by an anonymous developer named Ryoshi, who designed SHIB to be an alternative to Dogecoin (DOGE) on the Ethereum blockchain.
SHIB is an ERC-20 token with a decentralized exchange called ShibaSwap. The SHIB roadmap and ecosystem features an NFT art incubator called Shiba Artist Incubator, 10,000 Shiboshi NFTs, and an NFT game Shiboshi game.
The white paper, which is referred to as a “woofpaper,” for Shiba Inu describes it as a community-based cryptocurrency project. This means that the decentralized Shiba Inu community, which is known as the ShibArmy, is in charge of the cryptocurrency.
Shiba Inu had an initial circulating supply of 1 quadrillion tokens. 50% of the token was locked in Uniswap to create liquidity, and Ryoshi sent the other 50% to Ethereum co-founder Vitalik Buterin. He consequently burned 90% of the coins and donated the remaining 10% to the India COVID-Crypto Relief Fund.
Tracking value, Shiba Inu started in 2021 with a price of $0.000000000119. That year, it hit a peak of $0.00008845. Comparing these small numbers is difficult, but we can look at it as a price increase of over 74,000,000% in October 2021. It suffered a downturn after that with the value dropping over 75%.
Historically, meme coins have taken a back seat to the larger market capitalization cryptocurrencies. They’ve risen with the meme stock trend of GameStop (GME) and AMC Entertainment (AMC) in 2021.
In January, the Reddit group named SatoshiStreetBets considered DOGE the crypto equivalent of GME and joked about pumping its price up. Once the DOGE price skyrocketed, traders turned their attention to DOGE and other meme coins, trying to achieve gains from the rally. DOGE price reached an all-time high of 73 cents in May 2021 with a 2,000% increase in just five days.
Flow is a high-performance blockchain designed specifically for creating NFTs, crypto games, and apps. Unlike general-purpose blockchains like Ethereum, Flow is built to scale for potentially billions of people interacting with NFTs like in-game items.
Dapper Labs, the team behind NBA Top Shots and Cryptokitties, created Flow. The project came at the right place and time, during the NFT market boom and the rise of social platforms like TikTok and Twitter rolling out NFT features.
Cryptokitties, one of the first NFT collections on the Ethereum network founded by Dapper Labs, became so famous that it congested the network, bringing transactions to a near halt. The creators then sought to create their own Blockchain – Flow.
Flow uses a proof-of-stake consensus mechanism that requires validators to stake a certain number of Flow tokens to participate in the network. The way the validation works is unique, however, and splits validation tasks into four separate types of nodes: consensus, verification, execution, and collection.
Dapper asserts that splitting up the verification makes processing transactions more efficient than rival blockchains. It’s an alternative to sharding, or spreading out the storage and computational needs of a blockchain across numerous nodes. Because Flow doesn’t use sharding, Flow keeps transactions consistent, isolated, and durable, allowing developers to build on each other’s work.
When Flow blockchain developers created the Flow token, they envisioned it as a standard digital currency for crypto games, apps, and NFTs. There are several characteristics that make it a winner among cryptocurrencies, including distribution during CoinList community sale, use cases beyond staking and governance, and deflationary tokenomics as network usage increases.
When Flow blockchain developers created the FLOW token, they envisioned it as the standard digital currency for a new generation of crypto games, apps, and NFTs. FLOW has several characteristics making it a potential winner amongst countless cryptocurrencies, including:
FLOW has a refreshingly broad array of uses, some of which, like paying for storage rental on the Flow blockchain, give the token its stickiness.
Compound was founded in 2018 by serial entrepreneurs Robert Leshner and Geoffrey Hayes of Britches. Compound raised $8.2 million in funding from notable venture capital firms Andreessen Horowitz and Bain Capital Ventures, the venture-capital arm of the consulting firm Bain.
The software runs on Ethereum and aims to incentivize a distributed network of computers to operate a traditional money market. Compound uses multiple crypto assets to provide this service, enabling the lending and borrowing required without a financial intermediary like a bank. Essentially, Compound allows users to deposit cryptocurrency into lending pools for access by borrowers, and lenders earn interest on the assets they deposit.
Once a deposit is made, Compound awards a new cryptocurrency called cToken, a representation of the deposit, to the lender. Each cToken can be traded or transferred without restriction, but it’s only redeemable for the cryptocurrency locked in the protocol. This entire process is automatic and handled by Compound code, so lenders can withdraw deposits at any time.
Crypto hit a bear market in 2017, which is when many of the companies on this list were founded. The climate lasted until 2019. Cryptocurrencies also experienced a dramatic drop in May and June of 2022.
Bear markets are typically shorter than bull markets, usually around a year or less. Assuming it follows historic patterns and a bear market average of 289 days, this bear market may subside in October of 2022. Crypto is more volatile, however, and may have shorter or longer bear markets. The last crypto bear market, dubbed “crypto winter,” lasted around 3.5 years, due to the cyclical nature of the asset.
Bear markets are hard to predict and trade. Candlestick charters, the volatility index, current market conditions, and economic indicators can help with forecasting and estimating the end of the bear market, but it’s only an approximation.
The bear market can refer to the whole market or an individual asset. Typically, bear markets occur because of widespread pessimism and negative market sentiment, but they may also occur due to a weak or slowing economy, pandemics, wars, and geopolitical crises.
Any crypto market condition has the potential for profitability if you know how to strategize. As these companies proved, making moves in the bear market offers opportunities to capitalize when the market recovers and takes a bullish turn.
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