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Three Ways to Take Advantage of a “Crab” Market in Crypto
The adrenaline rush of bear and bull seasons of the crypto market is part of the thrill. By contrast, crab markets — when it’s neither bearish nor bullish — are pretty boring for the average crypto investor. So, they often sit on their hands and wait for clear signals to spring into action.
Lately the crypto market seems to be waking up but it’s been fairly crabish over the last six months and might return to that environment.
But here’s the thing: a crab market is an excellent time to plan and strategize to reap substantial benefits when the bull market finally rolls around.
We recommend three strategies to make the most out of such a season:
- Dollar cost averaging (DCA)
- Building up a cash reserve
- Arming yourself with a crypto skill set
But first things first: let’s understand what a crab market is.
What is a Crab Market?
A crab market, a sideways or trendless market, describes market behavior that is neither bullish nor bearish. During this time, prices tend to hover within a relatively narrow range over an extended period without showing a decisive upward or downward movement.
The crab market is named after a crab, whose movement appears to go sideways and neither forward nor backward.
A crab market will have these characteristics:
- Horizontal price movements
Prices are neither falling nor rising. Instead, they remain relatively flat or within a narrow range. This indicates the forces of supply and demand are roughly balanced, with neither bulls (buyers) nor bears (sellers) having a clear advantage.
- Volume stays flat
The trading volume stays subdued since buyers (bulls) and sellers (bears) are evenly matched. In the end, you have a relatively flat or stable volume.
- Low volatility
Since there isn’t a sustained momentum in either direction, the price doesn’t vary much between its highest and lowest points. As such, there’s less volatility than the one that normally accompanies bearish or bullish markets.
- Choppy price action
As usual in crypto, crab markets have frequent price swings, but they always return to an average level. Price charts often look choppy thanks to many small reversals and consolidations.
Crab markets can be a time of boredom or anxiety since it’s difficult to predict when the market will break out, plus it’s hard to make meaningful profits.
Yet, for the savvy investor, they’re a great opportunity to get your ducks in a row ahead of future bull run.
Here’s how.
#1 Dollar Cost Averaging
Whatever the amount you’re looking to put in your preferred cryptocurrency, there’s always the concern that the market could plunge, causing you to lose money. At the same time, the fear of missing out when the market starts an upswing trend can cause you to blindly rush in. Luckily, a DCA strategy can enable you to avoid either scenario.
DCA involves allocating a fixed amount of money into an asset, like crypto, whether weekly or monthly — regardless of the market’s short-term price movements. This means recurring purchases, whether prices are bottoming out or appear to be surging.
The idea behind DCA is that in the long run, you’re likely to spend less money than when trying to predict the market’s timing.
Employing DCA during a crab market can especially be advantageous.
Since the market lacks a clear direction, it’s the best time to stash crypto without the fear of going into loss in case the market moves in the wrong direction. Additionally, it grants you ample time to build your holdings so that by the time a bull rally rolls around, you can maximize on your portfolio.
#2 Build a Cash Reserve
During a crab market, prices are relatively stable. This can be the best time to accumulate cash to enter the market when it takes a bullish turn, especially if you’re a trader. Here’s why you should consider assembling cash in crab season:
- Get a head start: If you have cash on hand, you can quickly pounce on opportunities the moment the market turns bullish, giving you a head start on other investors. You’ll be ahead of the curve by the time the bullish trend starts retreating.
- More bang for your buck: In a crab market, prices are typically lower than in a bull market. This means you can invest the funds you have accumulated and rake in higher returns when the market eventually turns around.
- Get ready to trade: At the onset of a bull market, there’s bound to be volatility. Building a cash reserve sets you up in a position to take full advantage of that volatility when it finally arrives.
#3 Invest in Crypto Skills
Crab season is an excellent time to immerse yourself in crypto and gain employable skills, so you’re favorably positioned for work when the market breaks out for the better.
The cryptocurrency space is dynamic and multifaceted, with numerous roles ranging from devs, engineers, trading analysts, DeFi experts, coders, marketers, and more. Arming yourself with knowledge of the intricacies of the space can position you to bag a role when the market comes around.
Furthermore, you could land opportunities to get paid in crypto. As the industry matures, companies paying wages in crypto have become a common phenomenon.
While there are some downsides, getting paid in crypto rocks. That’s thanks to things like the ability to receive your payment near instantly, the potential for your earnings to grow in value over time, the opportunity to expand your investment portfolio, and the chance to participate directly in the crypto revolution.
Final Thoughts
Crab markets might not be the most exciting times, but they are the perfect opportunity to set yourself up for success when the bull market returns.
Dollar cost averaging helps you keep it together until such a time when you can identify a solid, favorable breakout, while assembling cash builds you a financial war chest so you can seize opportunities when prices skyrocket.
And, equipping yourself with a skill set is a low-risk investment in yourself that can position you for employment opportunities and potentially earn in crypto when the market rebounds.
