Current Situation

Before the bull market

A bull market refers to a sustained optimistic market sentiment where the prices of targeted assets keep rising and are expected to continue rising. This state is usually influenced by various economic, technological, regulatory, and socio-political factors, and traders generally feel excited and optimistic, while investors generally have an increased risk tolerance. Common characteristics of a bull market include continuous price increases for targeted assets, overall positive market sentiment, and increased trading volume. In the cryptocurrency market, bull markets usually last for several months or even years. In contrast, a bear market usually occurs after a bull market and refers to a market state where asset prices continue to decline.

The Bitcoin (BTC) halving event has historically been associated with the bull market in the cryptocurrency market, partly because the halving usually occurs before a significant price increase and market excitement. The BTC halving is done to control the supply of new BTC and ensure its scarcity. Whenever the Bitcoin blockchain produces 210,000 blocks, the block reward for miners is halved. This halving occurs approximately every four years, causing the issuance rate of Bitcoin to decrease, thereby affecting its supply and demand dynamics. The reduction in new supply, combined with the continuous rise in new demand, creates conditions for the price increase of Bitcoin.

In addition to its direct impact on supply and demand, the Bitcoin halving event also affects market sentiment and institutional adoption. Investors are optimistic about the halving event, attracting new investors to enter the cryptocurrency market. However, it is important to note that although historical patterns exist, the cryptocurrency market is highly complex and influenced by various factors, including market sentiment, regulatory developments, macroeconomic trends, and technological advancements. While BTC halving events are considered significant milestones, they do not guarantee the arrival of a bull market, and market dynamics may vary from cycle to cycle.

Below is a summary of the four historical data of Bitcoin halving:

Historical Dates of Bitcoin (BTC) Halving
Image soruce: https://www.gate.io/explore/bitcoin-halving-countdown

BTC is about to undergo its fourth halving. Will there be a loosening of monetary policy after a prolonged period of intense interest rate hikes by the Federal Reserve? Regardless of whether it is L0, L1, or L2, most of the new technologies and concepts in the cryptocurrency space are poised for launch. We can determine what stage we are currently at by looking at the total market capitalization of the cryptocurrency market, the cryptocurrency market fear index, BTC’s market dominance, and the trading volume of the cryptocurrency market.

Cryptocurrency Market Cap

First, we can get some insights into the overall market cap of the cryptocurrency market, as shown in the chart below. From November 1, 2021, to November 10, 2023, the total market cap of the cryptocurrency market dropped from $2.59T to $1.4T. In most cases, the development stage of emerging markets goes through a continuous cycle of reshuffling, which is a sign of survival of the fittest. This reshuffling usually helps the market move towards a more open and transparent new stage. Although the value of cryptocurrency market assets has generally declined significantly, it is evident that after reaching a short-term bottom in December 2022, the overall market cap of the cryptocurrency market has been in a slow recovery and consolidation phase until November 2023. It has risen from $0.8T in December 2022 to $1.4T in November 2023.

Cryptocurrency Market Capitalization Chart (11/1/2021-11/10/2023)
Image source: CoinMarketCap

Cryptocurrency Market Fear Index

From October 2023, the greed index in the cryptocurrency market has shown a significant increase, indicating a gradual release of enthusiasm. Typically, the greed index reaches considerably high levels in a bull market. As shown in the chart below, there is still some distance to overcome regarding investor sentiment before we reach a true bull market.

Crypto Market Fear & Greed Index (11/1/2021 to 11/10/2023)
Image Source: CoinMarketCap

BTC Market Dominance

The market dominance of BTC is gradually increasing, and people’s attention to blue-chip cryptocurrencies continues to strengthen. The market share of altcoins is slowly decreasing, and many new projects are waiting patiently in this phase. Although there is constant news about technological innovations in various fields every day, everyone is waiting for a “window opportunity” to hold blue-chip or new projects that emerge like mushrooms after the rain.

BTC Market Share Distribution Chart (11/1/2021-11/10/2023)
Image Source: CoinMarketCap

Cryptocurrency Market Trading Volume

The chart shows that the overall trading volume in the cryptocurrency market is not experiencing a significant surge compared to the obvious “peak moments.” Market sentiment is currently in wait-and-see mode. If the bull market is yet to come, does it indicate that the “bull market” is imminent?

Cryptocurrency Market Trading Volume (11/1/2021-11/10/2023)
Image source: CoinMarketCap

Why isn’t it considered a deep bear market?

Before the bull market arrives, the bear market may quietly leave. We can explore this from the current regulation of the cryptocurrency market, market prospects, and the attitudes of institutional investors.

Market Regulation

The uncertainty of regulation is a significant challenge in the cryptocurrency market. Governments and regulatory agencies worldwide have been discussing how to effectively control cryptocurrencies. While this uncertainty may affect investor sentiment and market behavior, “leading to a bearish market,” there have been significant regulatory developments in recent months, especially in the United States. For instance, the U.S. Securities and Exchange Commission (SEC) has delayed the approval of several Bitcoin exchange-traded funds (ETFs). Although the outcome of these regulatory decisions may significantly impact the future of Bitcoin, as long as the shoe has not dropped, the market sentiment is not as bearish.

Market Liquidity

Market liquidity shortage is also a factor contributing to a bear market’s continuation. In the cryptocurrency market, including Bitcoin, investing in cryptocurrencies may have enormous profit potential. As market liquidity gradually improves, prices will eventually return to their true value. The cryptocurrency market will also become more transparent, fair, and stable.

Market Outlook

The long-term outlook is an important factor that influences the market. Bitcoin is nearing its halving event, and its usage rate is consistently increasing. The application scenarios for Bitcoin are expanding, and the technology behind it is constantly improving. However, some skeptics believe that Bitcoin’s price is primarily driven by speculation, and its volatility makes it an unreliable store of value. With differing opinions, it is only when the price aligns with its value that we will know if the market is bullish or bearish.

Institutional Investors

The participation of institutional investors can also have a significant impact on the market. Financial giants like BlackRock and JPMorgan are reshaping the cryptocurrency industry, managing trillion dollars in assets. Their involvement lays the foundation for the next Bitcoin bull market. The increasing interest from institutional investors may imply significant price fluctuations in various digital assets. However, as market participation grows, the stability of cryptocurrency prices tends to converge towards their intrinsic value.

Summary of the Current State

In summary, we are in a relatively awkward period. It is neither a bear market, where assets constantly depreciate over the long term, nor a continuously expanding bubble. Various assets have experienced skyrocketing bull markets, BTC is about to undergo halving, the Federal Reserve has paused interest rate hikes, and more and more countries are using BTC as legal tender. Additionally, more financial instruments are being mapped onto Web3. Therefore, perhaps before the bull market arrives, you must learn better cash management techniques, use professional financial strategies to resist risks, optimize liquidity, and preserve your principal. Ensure that you always have sufficient cash reserves. The following sections will introduce several financial instruments that can not only diversify your investments and reduce risks but also provide a more professional way to achieve stability and balance in your investment portfolio for your reference.

Response Measures

During the bear market, it is easy to buy low and sell high, and the market volatility is high. In addition to directly purchasing spot goods, there are many methods to increase wealth; whether in cryptocurrency exchanges or the cryptocurrency market, there are many tools to generate cash flow.

Cash Management Strategies

There are various strategies and methods listed below, and there must be one that you like. Choose the one that suits you best and take action.

Auto-Invest

Dollar cost averaging is a financial service that helps you regularly purchase cryptocurrencies (accumulate coins) in fixed amounts. Setting a predetermined investment strategy (investment period, investment amount) strictly adheres to discipline and helps you overcome human weaknesses. Dollar cost averaging, or DCA, involves purchasing a specified asset/portfolio with a set amount at fixed intervals (you can choose monthly, daily, or yearly intervals according to your needs). It is a common investment strategy. This investment strategy suits anyone who wants to navigate bull and bear markets. After determining the investment target, there is no need to accurately grasp the investment timing. If you have a long-term optimistic view of the target, any time is a good time to buy. Moreover, this strategy is very friendly to users with different amounts of funds. You can set a target amount for each purchase, which is light and easy to follow persistently. It is a simple operation that helps you develop good discipline and the habit of forced savings. The financial market generally grows gradually over time, and by buying and holding blue-chip assets for the long term, you can obtain considerable returns.

DCA Strategy Illustration
Image Source：https://www.gate.io/auto-investment/38004

Lending Product (Lend & Earn)

Lend & Earn is a flexible lending tool that matches users with idle assets to users with borrowing needs. It calculates annualized returns on an hourly basis and settles interest in real-time. The interest earned by users who subscribe to Lend&Earn comes from the fees borrowers pay. For lenders, who are the users subscribing to Lend&Earn, interest is calculated hourly and funds can be redeemed at any time, providing greater flexibility in asset utilization. For borrowers, Lend&Earn offers loans at lower interest rates and convenient repayment options. The operation is simple - with just one click on “Lend,” and enabling automatic coin earning and compound interest, your idle assets can continuously earn money for you, which you can also redeem at any time.

Gate Lend&Earn Lend Illustration Image
Source: https://www.gate.io/lend-earn

Dual Currency Investment

Dual Currency Investment is a popular product that uses an option structure to buffer risks. It is an investment product with fluctuating returns and no guaranteed principal. The product is linked to the exchange rate (price) of tokens and allows investors to arbitrage the exchange rate difference between two currencies based on their expectations. For friends who have some understanding of cryptocurrencies, you can use this tool to exchange currencies without slippage. Choose your investment period (1-49 days) and direction (whether you want to sell high or buy low), then click “Apply” (sell the option contract) to obtain a high-yield investment potential without transaction fees. Both selling high (selling put options) and buying low (selling call options) have two settlement methods. Taking selling high as an example, assuming the current price of BTC is $30,000 and I want to sell it at $32,000. If the price reaches $32,000 on the expiration date, I can sell my BTC for USDT at my expected price. If the price does not reach my expected level, I can still earn BTC returns for the chosen investment period.

(Risk Warning: Dual Currency Investment carries the risk of price fluctuations.)

Dual Currency Investment High Sell Low Buy Yield Curve Chart
Image Source: https://www.gate.io/dual-currency-investment

Liquidity Mining (Yield Farming)

Liquidity Farming is a profit strategy in DeFi that allows cryptocurrency holders to earn rewards or other income by lending or collateralizing their cryptocurrencies. Due to the high volatility of token prices and other factors involved in the investment process, yield farming is susceptible to various risks, such as the high Gas fees required for most yield farming activities conducted on the Ethereum network. Yield farming also carries some specific risks, including smart contract risks and rug pull scams causing impermanent loss. The operation is straightforward - select the desired trading pair and click “Add Liquidity” to obtain higher annualized investment returns. However, it is still necessary to consider the trading volume and market trends of the trading pair. Some tokens and trading pairs may lack liquidity, resulting in 0 mining rewards.

Liquidity Mining Product Interaction Page
Image Source: https://www.gate.io/liquidity

Structured Investment Strategy

SharkFin

SharkFin is a type of principal-protected structured financial product. Its yield curve structure resembles the shark fin protruding from the water’s surface. It is essentially an option derivative, also known as a knock-out option. When Shark Fin is introduced, the parameters of the product, such as the underlying currency, subscription limit, lock-up period, etc., will be determined based on market volatility. Only the interest obtained in the end is not fixed. The acquisition of interest depends on whether the price of the target currency during the investment period exceeds (rises above/falls below) the price range. If it does not exceed, a higher annualized return can be obtained. If it exceeds, there is also a guaranteed return. (Gate.io’s existing SharkFin products for structured finance include Daily SharkFin, Bullish Bet, and Bearish Bet.) Taking Daily SharkFin ETH as an example, the operation is very simple. According to the displayed trading rules, first determine the expected annualized interest rate (e.g., 1%-8% as shown in the figure), the estimated investment period (7 days), and the principal amount you are ready to invest. Then, look at the countdown to the end time on the right side of the product. If there is enough time, check if the price range is the fluctuation price range within your intended investment period. Taking the Daily ETH SharkFin as an example, if I choose a price range of $2050-$2150, then the annualized return rate at maturity is calculated as follows:

1.00% + (Final settlement price - 2050) / (2150-2050) (8.00% - 1.00%), and the more it rises, the higher the interest rate. Profit = Principal 1.00% / 365 * Investment period.

(Risk Warning: SharkFin carries the risk of lower settlement rates when there is significant price volatility in the underlying token.)

Daily ETH SharkFin Trading and Profit Rules Diagram
Image Source: https://www.gate.io/structured_financial/sharkFin2/5236

Daily Smile

Daily Smile is a capital-protected structured financial product with a yield curve structure composed of fixed intervals and stable returns. It is essentially an option derivative that allows users to earn higher returns while protecting their capital. The parameters of Interval Smart Win, such as the target currency, subscription limit, lock-up period, and income intervals, are determined based on market volatility. Participants can earn additional high-risk returns while ensuring capital protection. The level of interest income depends on whether the price of the target currency during the investment period exceeds (breaks through/falls out of) the price interval. If it doesn’t exceed, participants can earn a higher annualized return. If it does exceed, there is still a guaranteed return. Interval Smart Win faces two scenarios every day:

• Scenario 1: At the observation point, if the price of the target asset does not exceed the price interval (i.e., within the interval), participants can earn a high annualized return (capital-protected yield < interval yield).
• Scenario 2: At the observation point, if the price of the target asset exceeds the upper/lower limit of the price interval (i.e., breaks through the upper/lower interval), participants will receive a guaranteed return.

Assuming that the annualized yield within the interval is 6.5%, the annualized yield outside the interval is 1.5%, and the lock-up period is 7 days, with BTC/USDT perpetual contract as the benchmark. The price interval is $36,500-$38,000, with the reference settlement price for the day being $37,008. If the BTC price is within the interval during this period ($36,500 < BTC price < $38,000), the settlement will be based on the annualized yield of 6.5%, and the income will be calculated as Principal 6.5%/365. If the reference settlement price for the day is $35,008, which is outside the price interval, the settlement will be based on the annualized yield of 1.5%. If the BTC price is less than $36,500 during this period, the income will be calculated as Principal 0.7%/365. This calculation repeats for 7 days, and the accumulated interest is distributed along with the principal at the end of the lock-up period.

Daily Smile Trading and Profit Rules Diagram
Image Source: https://www.gate.io/structured_financial/RangeAccrual/5240

Snowball

Snowball is a non-principal-protected structured product that is combined with Gate.io’s exclusive daily observation mechanism. It includes an embedded automatic call option (Autocall), which means that once the product’s predetermined conditions are triggered, the snowball will automatically terminate and the returns will be secured. The snowball product has two barriers: an upper barrier, which is known as “knock-out,” and a lower barrier, which is known as “knock-in.” If neither barrier is touched, the corresponding returns will be obtained upon the product’s maturity. As long as there are no special circumstances, the returns will continue to grow. With an investment of 1 U, you can participate in high-threshold products in traditional finance. The snowball product on the exchange ensures a transparent and open operating model. The return calculation is also very simple. It is benchmarked against the BTC/USDT perpetual contract. First, determine the product’s annualized interest rate, which is 20%, and the price range is $30,000-$32,500. As long as the price of the underlying currency fluctuates above $30,000 or below or equal to $32,500 within the investment period of 28 days, the settlement interest rate on the 28th day will be 20%. If the price of the underlying currency exceeds $32,500 within 28 days, the option will be knocked out, and the return will be the principal 20.00% / 365 actual interest days (the number of days within the price range). If the price remains below $30,000 and always below $32,500, only the principal and interest will be settled, where interest = principal * (1 + rate of increase/decrease), and the rate of increase/decrease = (final settlement price - initial price) / initial price.

(Risk Warning: Risks arising from significant market fluctuations in one direction)

Decentralized Financial Management Methods

Airdrops (Getting Freebies)

With the rapid development of the blockchain industry, more and more projects are starting to use airdrops as a way to attract market attention and reward early users. Airdrops, as a common marketing tool, not only provide users with opportunities to acquire cryptocurrencies but also bring extensive exposure and community-building opportunities for project teams. Click to participate in the Web3 Airdrop Tasks to learn about different types of airdrop projects and click “Go” to master the skills of participating in airdrops and directly using the project’s best interaction strategies.

Startup

One-click participation, win airdrop rewards for free. Participation is very simple. Taking the Picasso project as an example, complete the KYC verification and deposit an amount greater than 10 USDT to participate directly.

Running Master Nodes

To provide servers for many chains to implement specific functionalities as master nodes, node rewards can be obtained as a return for operating master nodes. However, this usually requires a significant upfront investment, and the ongoing operational costs are also considerable.

Accepting Cryptocurrency Payments

As a business owner or freelancer, accepting cryptocurrency as a payment method can not only expand the scope of your business audience but also accumulate appreciating cryptocurrencies in the long term. Of course, the risk lies in the high volatility of cryptocurrencies, making them susceptible to exchange rate risks.

Cryptocurrency Dividends

The operation of some tokens is similar to traditional dividend stocks, where holding these tokens can generate periodic returns based on the network’s profitability or the token’s designed economic model. For example, NEO produces GAS for holders. The risk in this aspect lies in the operational risks of the network or exchanges.

Liquidity Provision

In decentralized exchanges (DEX) like Uniswap or Sushiswap, providing liquidity for trading pairs can earn fees. Tools like these allow users to contribute assets to liquidity pools and earn commissions from trading fees.

Conclusion

In conclusion, the darkest moment of continuous decline in encrypted assets may have passed, and the market’s spring may be approaching. Each time BTC halves, each time encrypted regulations become clearer, and each time new technologies gather momentum, it fills people with expectations. Whether in a bull or bear market, anyone can choose and learn how to manage their finances based on their own circumstances.

If it happens to be a bear market, the above methods can help you successfully overcome the challenges of the winter; if it encounters a bull market, you can also reserve a portion of funds for financial management, so that you can join any investment opportunity at any time. Active investors seek all possible ways to participate in the diversity of the encrypted market.

All of the above financial strategies are methods to maintain cash flow even during an economic downturn. However, before making any investment decision, don’t forget to assess your risk tolerance. If possible, consult with professional financial advisors or continue to learn relevant free financial knowledge on Gate Learn.

None of the opinions provided above should be considered investment advice. Investing in cryptocurrency carries inherent risks and should be approached with caution.