00:00Welcome back to Decentralized News. Today we want to discuss some of the top hedging strategies that you can utilize, especially in a downward market trend or in a bear market.
00:13So this is something that relates to pretty much just trying to find some of the most effective ways to pretty much protect your digital asset portfolio during a market downtrend.
00:26And just so that you can have long term success in your investing endeavors, give us a like and a subscribe and also check out the links in the description if you want to support us.
00:36So what are the key points to take note? Obviously, there are multiple ways in which you are able to protect your portfolio during a market downturn.
00:51And, you know, the objectives are typically to limit your losses and also to stay away from high volatility if you can.
01:01And the crypto market has been something that's going on a bit of a downward trajectory within the sort of near short term.
01:13If we look at just maybe the beginning of this year or the end of last year leading up to where we are now heading into the third quarter of the year.
01:26So there are so many marketplaces where you could clearly trade the markets and also take advantage of the volatility in order to make profits.
01:40I've done several articles around that.
01:46You can head on over to Decentralized.News.
01:50But let's dive right into some of the strategies that you may employ to make yourself profitable.
01:58Short selling is one of those.
02:00This is a strategy that allows you as an investor to pretty much profit when prices of digital assets go down in value.
02:08So the objective here is to return a previously borrowed asset, in this case, a digital asset to a lender, and you are able to pocket the difference.
02:19So when short selling, unlike in a long position where the upside is unlimited, gains are limited to the flow price of that asset.
02:29So short selling is one way you can make gains or you can hedge against a market downturn.
02:38Increasing stablecoin exposure.
02:41Of course, everybody is now starting to get the importance of reliable stablecoins after the drama that's happened recently with UST.
02:51And some of the rumors around some of the algorithmic stablecoins and the instability and even some slight de-pegging of some of the stronger backed stablecoins such as USDT.
03:09So this is not something that you would consider a risk-free strategy.
03:14Of course, even if you're using something that has a good reputation, such as USDC at this point, stablecoins do allow you as an investor to escape of volatility, pegging your value to generally a fiat currency.
03:29While that is inflationary in nature, it is a little bit more stable in the short term when you are dealing with markets that are highly volatile.
03:40So while holding positions in stablecoins, investors are even, you know, sort of able to earn some passive income as well, staking coins.
03:51Typically, you know, the best strategy would be to use DeFi applications to do this or deposit them in some centralized platforms.
04:00But of course, there are many risks associated with that as well, just as there are risks with DeFi as well.
04:07But more so if you think about what has been coming out of this shaky time in the market, it's the centralized platforms that have definitely been going down.
04:22If we look at Celsius, if we look at centralized, even hedge funds, investing companies such as Three Arrows and BlockFi, which came under stress until it got bailed out recently by FTX, etc.
04:37So, or Voyager, for example, that also had exposure to USD and all of that.
04:44But increasing your stablecoin exposure could be one of those methods or strategies you could utilize to hedge against market volatility at times like this.
04:57Crypto options, again, another way that you can hedge against a downturn.
05:04Option contracts do come in two different forms, calls and puts.
05:10And traders can protect long positions by buying put options.
05:16And a put is pretty much a type of contract that allows the buyer of the agreement to sell a specific asset at today's price during a late date.
05:27In other words, buying a put contract is like buying a portfolio insurance and it does give you the chance to sell a falling token at a predetermined strike price.
05:41So another possibility is to sell call options.
05:45Here, you know, the seller does get a premium for agreeing to deliver the underlying asset at an established price before a set date.
05:55If the buyer does demand it, yield farming is another one of those strategies, again, that you can also employ.
06:03So this is a process where users can earn rewards by pulling crypto assets together.
06:08Other users may use the cryptocurrencies added to these pools, which are controlled by softwares or pieces of software.
06:16They typically spark contracts for borrowing lending, staking applications such as Balancer, Convex Finance can offer APYs from 5% to 11% rewarding users who deposit the BTC ETH and stable coins.
06:31Of course, this is also not a completely risk-free thing to do, but yield farming is definitely one of those things you can do to make some money.
06:40Dollar cost averaging is always a good investing strategy when the market is in a downturn.
06:48It is pretty much helping you deal with volatility by spreading your buys across a sort of larger time frame without paying too much sort of consideration to price when making purchases.
07:04And again, you know, some people claim that this is the best way of doing things instead of trying to time the market.
07:14So these are some of the strategies.
07:16If you're dollar cost average, you yield farm, you maybe get into options, get yourself exposed to some stable coins.
07:24Maybe you shot the market.
07:26Those are some of the hedging strategies that you can have that could make you money in times of a downward trend.
07:34Let me know if there are any other strategies that you guys employ or are using or we're not aware of.
07:40We haven't covered on this in this video.
07:42And maybe we can do a part two where we can talk about some of those strategies.
07:46Again, don't forget to check out the links in the description to my books.
07:50This is Tokenized Trillions Blockchain Applied if you want to learn more about real world asset tokenization.
07:56And also make sure you join our Discord and our Telegram.
08:01Truly appreciate it.
08:02Till next time, make sure you like, share, subscribe, turn on the notification bell.
08:07I'll see you in the next video.
08:08Peace.
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