How to Make Opportunity for USDC in Bear Market

Bear market

What Exactly is a Bear Marker

A 20% decline from recent highs is often seen as a bear market. The performance of the S&P 500, which is typically seen as a benchmark indicator of the entire stock market, is the subject of the phrase’s most frequent use.

Bear markets, however, can refer to any stock index or a specific stock that has declined by 20% or more from recent highs. As an illustration, we may claim that the Nasdaq Composite entered a bear market when the dot-com bubble burst in 1999 and 2000.

Or, suppose a certain company publishes weak earnings and sees a 30% decline in the value of its stock. We may say that the stock has entered a bear market due to its price decline.

Although the terms “bear market” and “stock market correction” are sometimes used synonymously, they relate to two separate levels of poor performance. Stocks must decline by 10% or more from recent highs to be considered in a correction, and once they have declined by 20%, they can be upgraded to bear markets.

Reason Behind the Cause of Bear Market

There are several potential causes for a bear market, but investor anxiety or uncertainty is typically one of them. The most recent bear market in 2020 was brought on by the global COVID-19 epidemic, but other factors in the past have included massive investor speculation, reckless lending, changes in the price of oil, excessive leverage in investments, and more.

What Exactly is USDC

Circle developed USDC, a stablecoin backed by the US dollar. It is a fiat-collateralized stablecoin that minimizes price risk while providing the benefits of trading with blockchain-based assets. On the Ethereum blockchain, USDC is an ERC-20 token that is fully collateralized by equivalent USD assets kept in accounts that are open to inspection.

The most recent data reveals that Circle has over $55 billion in USDC reserve assets held, of which $42 billion are US Treasury Securities and $13 billion are cash held at US-regulated financial institutions. In fact, Circle CEO Jeremy Allaire recently announced an initiative to increase transparency over their stablecoin.

The Circle team is a strong advocate for increased cryptocurrency use and is quite engaged in the policy and general crypto communities.

USDC in Bear Market
Opportunities For USDC Investment

There are numerous options to invest in USDC-based assets, including using Ethereum-based decentralized exchanges with USDC as the base currency and contributing liquidity to stablecoin liquidity pools. These strategies are meant for more experienced traders who have a better understanding of DeFi.

There is yet another way to invest in USDC. For instance, through Phemex’s Earn Crypto program, investors can invest in USDC by opening a savings account that earns income. In fact, Phemex is now conducting a campaign for USDC savings where we’re offering a rate of 18.8% APY on USDC for 7 days (July 18-24). Therefore, this product is something to think about if you’re looking at different opportunities to invest in USDC with a high return.

Things You Can Do During Bear Market

Utilizing Dollar-Cost Averaging, Buy the Crypto Dip

When markets get extremely volatile, it’s all too simple to be on the wrong side of a crypto deal, but that doesn’t mean you have to stand by and let your portfolio lose value hour by hour.

Investors will be able to “buy the dip” if they have a reserve of fiat money or Stablecoins or if they have spendable funds in their bank accounts. This idiom, which is widely used in the cryptocurrency sector, describes the habit of buying up some cryptocurrency whenever the market experiences a big bearish correction.

What Is the Purpose of Stablecoins, Anyway

The theory is that dip purchasers will make a tidy profit if and when prices return to their earlier highs. This is reminiscent of Warren Buffett’s iconic stock investing maxim, “When there’s blood on the streets, you buy.”

While buying the dip can be done in a single transaction, “dollar-cost averaging (DCA)” is the most advised course of action. You must do this by dividing your reserve funds into smaller portions and engaging in a number of transactions over time.

Let’s imagine, for illustration, that you have $1,000 in cash reserves. Breaking the sum into five tranches of $200 or even ten tranches of $100 and trading with those smaller sums would be an excellent DCA technique.

The idea behind this is that since it’s extremely difficult to predict when an asset has bottomed down (reached the lowest price before reversing), it usually makes more sense to buy a tiny quantity and wait to see if the asset’s price falls any more. If so, make a few additional purchases, and so on.

In most cases, doing this will produce far better outcomes than putting all of your money into one trade, unless, of course, you were fortunate enough to go all-in at the ideal moment.

To Determine the Optimal Entrance Point, Use Indications

It is feasible to utilize specific indications to determine whether an asset has reached a bottom for investors who have a basic or greater understanding of technical analysis, which is the discipline of projecting an asset’s price movements based on chart trends, indicators, and patterns.

Of course, no indicator is 100% reliable, but they frequently provide a clear indication when to purchase a dip.

Use of the Relative Strength Index (RSI) indicator, a momentum oscillator with a channel and a line that moves in and out of it, is a common strategy. This tool’s two main components are as follows:

Overbought: The item in question is deemed “overbought” (that is, overvalued) when the indicator line breaks out above the channel. This typically indicates that prices will soon begin to decline once again.

Oversold: The item in issue is deemed “oversold,” or undervalued, and typically indicates that prices will climb soon, when the indicator line breaks out beneath the channel.

Although these two signals can be utilized independently with decent results, they are not necessarily reliable bottom or top predictors, especially on shorter time periods like the four-hour, hourly, or 30-minute alternatives. Using the RSI divergence strategy is a better strategy.

The RSI typically exhibits a pattern similar to that of an asset’s price, so when the price declines, the RSI indicator line likewise declines. The two lines occasionally move in opposition to one other, though. An RSI divergence, which is all this is, often denotes the start of a trend reversal.

Check to see if the RSI line makes a higher high while the associated price makes a lower low in order to identify a bottom. On a longer time frame, such as the daily, the RSI line should be close to or entering the oversold region in order to indicate a strong reversal potential.

Below, we can see an RSI divergence on the daily chart for bitcoin (A), which indicated a significant trend reversal and price increase. Three months later, another RSI divergence (B) appeared, this time in the overbought area, indicating the beginning of a negative trend reversal.

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