Firstly let’s discuss what is a crypto bear market, Bear market is the season in crypto is when there no significant price action towards the upside. It begins with huge crash from Blow-off Top recorded in BTC charts. As most of our readers might be aware of the BTC halving, which occurs in every Leap-year. Last halving happened in May of 2020, BTC registered new ATH (All-time-high) in less than a year since the halving. The intention of this article is to show mining as good choice in these turbulent times
In BTC halving, the block-reward of Bitcoin is reduced to half. This causes a supply crunch, as Miner revenue drops, most of the miners prefer not to sell their crypto which in-turn makes the price of the crypto go up. This results in a Blow-off Top as observed in the chart below. Average price of BTC in May 2020 is around $8,500. As mentioned earlier, we saw a massive Bull-market, where the price of BTC reached $65,000 on April 12 2021. Since then we have been seeing the price going sideways, fluctuating in the range of $25K – $69K. Also we don’t expect any exceptional increase of price before the next halving i.e May 2024.
If you had already invested in crypto earlier during the Bull market, then you are going to be in two years of pain. As the next halving is two years away from the date of writing this article i.e 25 May 2020. What could be the steps through which we could mitigate the losses occurred during the crash since the starting of 2022. Based on the experience of NABTech team we are suggesting the following ways of reducing your risk in bear market. Also to mention this is just our opinion, consult your financial advisor before investing.
- Portfolio Rebalancing – Alt coin value almost approaches 0 when compared to BTC. In bear market rebalance your portfolio majorly into Blue chips like BTC, ETH
- Dollar Cost Averaging – Divide the total amount to be invested into smaller chunks, Invest these chunks periodically into the target crypto you want, to counter the volatility of the market.
- Strong Fundamental Analysis – In the new age where we have 10K+ tokens, which are into varied domains like DEFI, NFT, Metaverse we need to do strong Fundamental Analysis. After the recent LUNA fiasco, we need to more careful before investing to newer tokens which don’t have any proven track record.
Best time to accrue tokens in your Portfolio is the Bear-market. In Bear-market the price of the major Blue-chip coins like BTC almost go sideways throughout the time. Team Nova thinks that Crypto-Mining is the best way to enter into the crypto in a bear-market. Let’s analyze Investment vs Mining, As on the date of writing of this article, ETH is hovering around $2000, so if we are planning to investment $6000, we would be getting 3 ETH. If we invest the same amount in our Model 0 Pro, which costs $ 6,200 (for Export Clients outside India and in India GST has to be included in final cost) based on the calculation on 25 May 2022, We would be earning 0.00574 ETH per day (source). Monthly earning calculation is a little speculative as network difficulty & gas fee might change every day. For Model 0 Pro we would be earning 0.17 ETH per month which turns out to be 2 ETH per year.
NABtech provides best in class hosting for mining machines (10 cents / KWH), with our in-house mining software, robust enough to continuously monitor the health of the machine and tune the machine for different tokens / coins. As some of our audience might be aware of ETH 2.0 and it’s move to POS (Proof-of-stake), where ETH shall be no longer minable at some point of time. Expecting the Possible merge for phase 1.5 will be taking place in sometime between August and October based on ETH Dev call. Post this merge Difficulty of Ethereum will be increasing which will make block times slower and may result in dip in miner revenue in terms of ETH.
GPU Miners need to be prepared to migrate to another blockchain. When difficulty bomb makes ETH less profitable than other Altcoins, Possible suggestions from NABtech would be Ergo (ERG) & Flux (FLUX). Regardless the point of this discussion is, if we buy crypto at these prices we would be getting only 3 ETH worth of crypto. Through mining, there is possibility that we can earn more than 3 ETH worth of crypto, even in the post ETH 2.0 scenario. ATH (All-time-high) of ERG is $33, currently it’s trading at $2.2. In the next bull market this has potential to cross it’s ATH, not saying that it will but projects with good fundamentals tend to maintain this uptrend in longer timeframes and especially in bull markets.
To summarize, in bear markets we have to stay away from smaller-cap Altcoins, always do Dollar cost averaging and can consider mining as a valid option as we will be upholding first two principles with this and we are ultimately not buying crypto directly, rather we getting it as a reward for supporting the blockchain eco-system. NABtech is and always will support the blockchain eco-system and promote the technology amongst the masses / millennials to introduce them to the power of Decentralization.