Right now, the cryptocurrency market is experiencing what can only be described as an incredibly strong bull market. The vast majority of assets are in the green across all short-term timeframes, and many have reached their all-time highest values in recent weeks.
Now is exactly the time to begin taking the time to understand how best to maximize your yields, to make the most of the market while it lasts.
Boost your yields
One of the simplest ways to boost your profits in a bull market is to simply make better use of your funds. This generally means putting idle funds to use to turn a profit — after all, idle funds are liable to depreciate in value if not generating a yield.
Perhaps the simplest way to achieve this is through the use of a collateralized lending platform, which allows you to deposit your cryptocurrencies — whether they be stablecoins like Tether (USDT) and USD Coin (USDC) or volatile assets like bitcoin (BTC) and ether (ETH) — to turn a secure profit.
Your deposits are then securely loaned to collateralized borrowers who agree to repay the funds or lose their collateral. As part of the repayment, these borrowers are required to pay interest — which you pocket as profit.
Though there are a large number of lending platforms, Pokket — a platform that offers a variety of interest-yielding products — stands out as arguably the best solution for most investors since it provides the best interest rates we have seen — such as 15% APY on stablecoin deposits and 6.75% on BTC deposits.
Unlike many platforms, Pokket doesn’t feature a long lock-in period, with a 14-day minimum period compared to up to a year elsewhere. It also offers up to 277% APY on its structured savings products which bear slightly higher risk, but this is minimized due to the short 1-week hold period.
Embrace the dips
In a bull run, it’s common to see most major assets performing well. This has held true in 2021, where almost every top 100 cryptocurrency has gained substantially since the start of the year.
But this doesn’t mean turning a profit won’t be a bumpy ride. Instead, it’s more likely that the way up will be filled with both minor and major dips along the way — all of which provide an opportunity to boost your profits.
Though you might be tempted to simply hold through the dips until profitability is achieved, it can actually be more efficient to trade the dips by opening up a short position which will turn a profit while the market falters. You would then close these positions before the market recovers, leaving you in an overall gain.
The simplest way to achieve this is by trading derivatives for the asset you hold. For example, if you are holding BTC, but expect a temporary dip, you could short sell bitcoin futures or buy put options with or without leverage to capitalize on the dip.
Although trading futures and options are powerful ways to hedge against downside, the practice is still largely reserved for more experienced traders.
Fortunately, there several more accessible solutions in the works, including Bumper — a platform that transfers downside risk to contributors to a liquidity pool in exchange for a small fee.
However, Bumper is still some time away from a public launch, so you’ll need to stick with put options or short futures — at least for now.
We’ve all experienced FOMO (fear of missing out) after seeing a cryptocurrency pull off an incredible rally, and considered what we can do to do not only find out how to spot these opportunities early, but also enter and exit at the right time.
This capability is the difference between a trader who locks in a few percentage points on each trade, and those who are able to achieve multiple times their investment instead.
But actually pulling this is off is easier said than done. It’s not only a challenge to identify which tokens will perform well, but also when to enter and when to exit. While few people are able to time this perfectly, there are now a number of tools that make doing so a far simpler task.
NewsCrypto recently unveiled one such tool, which uses social media data and artificial intelligence to predict the future price of major cryptocurrencies — making spotting good entry and exit points less of a guessing game.
Just remember, the trend is your friend. Don’t forget to set your stop losses to protect yourself against any downside. If the market does turn bearish, you’ll be able to switch to a short strategy to take advantage of the downtrend.