How To Make Money When Crypto Crashes
Published: 2025-10-30
Status:
Available
|
Analyzed
Published: 2025-10-30
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 6
Prediction
Topic
Status
Utilize perpetual futures at 1x leverage to hedge a portion of a BTC holding, effectively creating a delta-neutral position that profits from price drops while retaining upside from the initial holding.
"If you're holding 5 BTC, but you're also convinced the market is going to continue a downtrend, but you don't want to dump it into a panic. One simple way to use derivatives here is to hedge by shorting .5 BTC on perpetual futures at 1x leverage."
Incorrect
Explaination of how funding fees work in perpetual futures, where longs pay shorts when the perpetual futures price is above the spot price, and shorts pay longs when it's below.
"If you're not aware, funding is a periodic payment between longs and shorts that exists to keep perpetual futures prices anchored to spot prices. When pers trade above spot, funding goes positive and longs pay shorts. When pers trade below spot, funding flips negative and shorts pay longs."
Pending
A delta-neutral hedged short position can profit from positive funding payments, which are common when the market sentiment leans long.
"If the crowd leans long, which is typically the case in crypto, funding skews positive, which means a hedged short can collect those payments while sitting in a delta neutral position. That's the essence of the so-called basis trade."
Incorrect
Perpetual futures offer an advantage over quarterly futures and options due to their lack of expiry, reducing timing stress and allowing hedges to be held as long as economically viable.
"One neat feature of PERPS is that they have no expiry, hence the name. So, you're not racing a clock the way you would with quarterly futures or options. That lowers the timing stress. You can keep the hedge on as long as the economics make sense."
Pending
During extreme market stress and liquidations, auto-deleveraging (ADL) can trim winning positions, including shorts, to balance exchange books.
"For example, during the last liquidation cascade that saw $19 billion wiped out, auto delever or ADL kicked in across venues. Now, ADL trims winning positions. Yes, including shorts to keep the books balanced."
Correct
Native staking of Ethereum (ETH) can provide protocol rewards for securing the network, with APR varying based on network activity and provider; for instance, Lido Finance offers a 2.6% APR.
"Native staking pays you protocol rewards for helping to secure the network. All without giving up custody of your ETH if you choose to go the decentralized route. The APR you receive from staking your ETH depends on network activity and which staking provider you use. If we take Lido Finance for example, the current APR sits at 2.6%."
Correct
Liquid staking, like with Lido, allows users to deposit ETH and receive a liquid staking token (e.g., stETH) that accrues rewards and remains usable in DeFi applications.
"Liquid staking takes this concept one step further. With Lido, you can deposit ETH and receive a staked ETH token which acrews staking rewards while staying usable across DeFi. That receipt token can then go to work in money markets, DEX pools, and more."
Correct
Staked ETH tokens can trade at a discount to ETH during market stress, potentially causing issues for leveraged strategies and leading to forced unwinds, as observed in 2022.
"In stress, staked ETH tokens have traded at a discount to ETH, which can technically blow up fancy staking loops and trigger forced unwinds. We saw some signs of that tension during 2022's deleveraging when Lido's staked ETH slipped below par holders rushed for liquidity."
Correct
Dollar Cost Averaging (DCA) involves buying a fixed amount of an asset on a regular schedule, regardless of price, to smooth out the average cost over time and achieve potentially strong long-term returns.
"Dollar cost averaging just means you buy a fixed dollar amount on a fixed schedule regardless of price. No glorious entries with bragging rights, just steady accumulation that smooths your average cost over time. No, it's not a way to get short-term profit during a downtrend. But in the long run, these are some of the best buys you'll ever make."
Incorrect
DCA should be applied to assets intended for long-term holding, such as Bitcoin (BTC) and Ethereum (ETH), as many altcoins may not recover past highs after a hype cycle fades.
"And that means if you're going to keep pressing the buy button while your feed screams doom, you should be doing it in assets you actually want to hold for years, not weeks. For most, that means sticking to the leaders, BTC and ETH, because a lot of alts simply never reclaim old highs once the hype cycle dies."
Incorrect
Bitcoin (BTC) is considered the most robust and battle-tested crypto asset, making it a strong candidate for dollar cost averaging due to its resilience.
"Again, this is one of the reasons it may make sense to just put on your BTC Maxi hat when it comes to dollar cost averaging. BTC is the most robust and battle tested crypto asset. It's number one for a reason."
Incorrect
For Bitcoin (BTC), the duration an investor remains invested ('time in the market') is more crucial for success than achieving a perfect entry price.
"With BTC specifically, time in the market beats attempts at precision entries. Hold long enough and your entry matters a lot less than your ability to stay invested."
Incorrect
Crypto lending protocols like Ave allow users to deposit assets and earn interest, with Ave demonstrating resilience by automatically processing significant liquidations during market downturns.
"Here, you simply deposit crypto assets to lending protocols like Ave and collect interest payments. Ave remains the flagship venue for lending with battle tested architecture that has withtood the test of time. And that's no exaggeration either. During the 10th of October market wipeout, Ave processed a record wave of liquidations automatically, about $180 million worth without the protocol pausing."
Correct
Market chaos can create arbitrage opportunities where the same asset is priced differently across exchanges due to panic selling and liquidity variations, allowing for profit by buying low and selling high.
"When the market faces chaos, the same asset can be priced differently on different venues due to panic selling and differences in liquidity conditions across exchanges. That gives you an arbitrage opportunity. Simply put, arbitrage means you'll buy where it's cheap, sell where it's less cheap, and keep the difference."
Correct
Stablecoins can de-peg during periods of stressed liquidity, creating arbitrage opportunities where on-chain prices deviate from centralized exchange prices.
"There are also times when stable coins can depue to stretch systems and liquidity. For example, we've seen curve and unis swap pools overrun by one-sided flow, pushing a dollar stable closer to 99 or 98 cents on chain while centralized books still market at $1."
Correct
When the crypto market is bearish, consider seeking long opportunities in other asset classes like stocks and gold that are exhibiting upward trends.
"As the saying goes, there's always a bull market somewhere. If crypto is risk off, but other assets like stocks and gold have been making new highs, you may simply be better off looking for long opportunities in those upward trending markets."
Correct
Widespread public interest and queues to buy gold may indicate that the gold market is nearing a peak.
"In fact, all the footage from around the world of people queuing up to buy gold probably means things are at or close to a peak there."
Pending
Even during Bitcoin downtrends, some altcoins may show uptrends, but this outperformance is typically short-lived, suggesting they are best treated as short-term trades.
"If you look, you'll still find altcoins with green candles and an uptrending market structure, even in brutal BTC downtrends. Just be conscious of the fact that such outperformance typically doesn't last very long. So, it's probably best to treat those altcoins as shorter term buys if you're getting involved."
Correct
Holding cash can be a valuable strategic position, as exemplified by Warren Buffett's Berkshire Hathaway amassing a record cash pile, indicating its importance during uncertain market conditions.
"In fact, it's sometimes the best one. Don't believe us? Just ask Warren Buffett. His holding company Barkshire Hathaway is currently sitting on a record cash pile approaching the $350 billion mark."
Correct
Automating DCA through scheduled recurring buys on exchanges or apps is recommended to ensure consistent investment regardless of market sentiment or willpower.
"Mechanically, it's best to automate your DCA strategy, too. Most exchanges and apps let you schedule recurring buys, and that lets you deploy a fixed amount at regular intervals, so you're not relying on willpower during the toughest times to buy."
Correct
Value averaging is a strategy that targets a portfolio value trajectory, prompting larger buys after drawdowns and smaller buys after rallies.
"Value averaging targets a portfolio value path rather than a fixed cash amount, nudging you to buy a bit more after big draw downs and a bit less after sharp rallies."
Correct
Threshold DCA modifies regular DCA by doubling the buy amount if the price drops by a set percentage (e.g., 20% from 30-day average) and potentially halving it if it rises by the same amount.
"There's also threshold DCA, which keeps the timing cadence, but adds a simple rule. Double your scheduled buy if price is down, say 20% from its 30-day average, or have it if it's up 20%."
Pending
A DCA strategy should include invalidation criteria, such as a fundamental breakdown of the asset's thesis or disappearance of liquidity, to prevent continued investment into a failing asset.
"Second, set some kind of invalidation, a fundamental break that stops the DCA strategy. If an asset's core thesis dies or liquidity disappears, you don't DCA into zero."
Correct