How To Earn Passive Income in a Crypto Bear Market?

Key Insights

• • The Bear market signals the fall in the price value of tokens.
  • Bear markets are nearly unpredictable.
  • You can earn passive income by staking, mining, or winning airdrops.

Since the crypto market recorded its highest surge in November 2021, the bear market has gradually dominated the ecosystem. While experienced investors might be acquainted with the continuous price value decline, new investors might be fed up. 

Similarly, it seems experienced investors would be able to navigate the market while new investors would be anticipating the boom in the market— leaving their digital assets idle in their wallets. 

On this premise, we identify what investors should expect in a bear market. We shall identify how you can earn passive crypto income while the price values continue to decline. 

Understanding the Bear Market

A bear market refers to a negative trend in the price value of assets, securities, and commodities. A bear market is characterized by a sharp decline and a strong downtrend leading to significant price falls. Bear markets vary across financial markets. 

Furthermore, in the crypto market, bear markets are characterized by continuous falls in the price value of crypto tokens. The market conditions tend to last longer and continue without control— since there are no regulations compared to the traditional market, where the decline in the price of assets can be controlled.  

In the traditional market, S&P 500 says you can consider a market to be in its bear phase if it experiences a decline of about 20% over a sustained period, usually 60 days or more. The primary cause of the bear market is believed to be the result of investor pessimism. These investors begin to lose confidence in their investors, and instead of losing their entire investment, they start to sell off these assets and their holdings. Massive sell-off by investors will automatically lead to the fall in rice of these holdings. 

Furthermore, while it is nearly impossible to predict the bear market, you can always anticipate it. When you anticipate the fall in price value, you equip yourself with ways to continue earning in the bear market. 

Earning Passive Crypto Income in a Bear Market 

The current bear market has spiralled into crypto winter. There are mixed reactions in the crypto ecosystem as to how to survive the continuous decline in the price value of digital assets. While the market downturn has dampened investors’ confidence, there are still remedies. 

There are still remedies— whereby investors can utilize their digital assets and earn passive income.  Some of the ways  to earn these passive crypto incomes include: 

1. Staking

Staking is one of the viable ways to earn passive crypto income. While new investors may not understand what it entails, seasoned investors understand the rudiments of staking.  

Staking requires you to lock your digital assets in a platform while you earn interest. You can lock your token in a centralized crypto platform like Binance, Kucoin, or other platforms. Similarly, you can lock your digital assets on decentralized platforms like Uniswap, Curve, etc. 

Furthermore, there are two types of staking. You can either engage in flexible or fixed staking. In flexible staking, you can withdraw your locked tokens anytime you deem fit. However, in fixed staking, you agree to lock your tokens in for a certain period— until that specified date, you can not pull out your staked token and interest. 

Experts have compared staking to savings accounts in traditional financial institutions. As you deposit your money and earn interest in banks, you can lock your tokens and earn interest in crypto. 

2. Mining 

Mining provides another avenue to earn passive income in the bear market. Even though you earn more during the bullish phase as a miner, you can still earn while the price values decline. 

In crypto mining, you are verifying the validity of transactions and working to create new blocks on the blockchain. Similarly, you must set up computer hardware and software to use computational algorithms. 

You can either engage in mining alone or join a mining pool. In mining alone, you run a “one-man show.” However, in mining pools, you join a group of other miners to solve computational algorithms. 

While you have all the rewards to yourself in individual mining, you share the rewards among other miners in your mining pool. Furthermore, miners share the rewards in mining pools according to their hashing power contribution.

3. Airdrops

Crypto investors can earn passive income in the bear market through airdrops. When developers want to promote a project and generate buzz around it, they give out airdrops. Airdrops are crypto-free giveaways designed to promote and create awareness for certain projects.

Furthermore, before you earn airdrops, you are required to meet certain conditions or must have participated in some activities. For instance, a crypto project would require you to repost a project and invite people to engage the project online before you can earn the airdrop. 

Since airdrops became popular in the crypto world, it has become a viable way of generating passive income, especially in a bear market. Investors can join airdrops on platforms like Airdrop Alert, CoinMarketCap etc.

Since airdrops became popular in the crypto and NFT ecosystem, fraudsters have continued to use them. Fraudulent airdrops now compromise people’s private keys and confidential details.