Tips to Help Traders
Markets move in four primary phases. Accumulation phase, mark-up phase, distribution phase, and mark-down phase. Trading strategies often vary according to market phase. During bear markets traders can leverage different trading strategies to adapt to new market conditions. During bull markets (mark up phase) typical strategies consist of buying dips and pullbacks at moving averages and oversold RSI levels. During bear markets, common strategies consist of shorting bounces and overbought RSI levels.
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Rotate Out of Risk
The beginning of an extended bear market is a great time to de-risk any portfolio by rotating out of risky assets such as altcoins and out of highly speculative NFT’s that don’t produce cash flow. These types of high-risk-high-reward assets are typically the most likely to suffer a relatively larger price decline during a bear market.
Deleverage
It is also prudent to deleverage long margin positions to avoid liquidation and collateral loss. After de-risking and deleveraging from high risk stocks that have had extended upside, bear markets are a great time to rotate out of risk assets and NFT’s and into stablecoins which return a stable yield and will not suffer from downside as they maintain a peg to Dollars or other currencies like Euro.
Hedge Risk
Downside risk can be hedged by selling calls, or buying puts. Automated option strategies are becoming very popular in DeFi and can be used to hedge your portfolio.
Rotate into Stablecoins
Ooki’s margin trading protocol enables anyone to lend out funds to borrowers seeking to open margin positions. Ooki also combines a powerful interest rate system to dynamically adjust rates based on total utilization of funds. Ooki uses an innovative formula to ensure lenders can receive highly attractive returns on stablecoins. Bear markets are a great time to earn regular yield on stablecoins without downside risk.
Earn Yield on Stablecoins
Ooki offers multiple stablecoin trading pairs which can return a high yield by offering attractive lending rates for stablecoin lenders. By rotating a portion of a traders portfolio into stablecoins and lending them out on Ooki, traders can protect themselves from long term market downturns and earn consistent returns with relatively little risk. In the event of an extended bear market lasting one or two years, this strategy can be especially useful to protect from extended downside.
When traders open a long position on Ooki, they must first deposit collateral, and then borrow funds against that collateral. The borrowed funds are taken from lenders who have deposited assets into Ooki liquidity pool in exchange for interest that is paid to lenders.
One unique feature that Ooki offers is no rollovers. Under Ooki’s no rollover lending system, borrowers loan size incrementally increases each block instead of selling the traders collateral. As a result, traders' positions can now remain open indefinitely as long as their margin stays within the liquidation safety ratio.
Staking Low Market Cap Income Producing Assets
During bear markets, income producing assets suffer less of a price decline than highly speculative assets without any cash flow. Any trader seeking to prepare for a bear market should make sure that his portfolio consists of income producing assets.
With OOKI token staking, protocol platform fees generated from trading, borrowing, lending, and flash loans are distributed to platform stakers. During a bear market, trading fees can increase as traders manage their positions, and wind down large positions to meet margin calls. These activities can create large volumes on trading platforms.
OOKI token stakers can earn steady fees and yield by staking their tokens on the platform in order to earn fees generated by the platform.
Short Bounces on Weakness
Bear markets are a great time for traders to short bounces into overbought RSI, and short term moving averages. Ooki gives traders the tools to easily open short positions with up to 15x leverage with very low fees.
Conclusion
To profit from extended bear markets, Ooki can provide a number of beneficial trading tools and services to help traders remain profitable. A few of these strategies include:
- Stablecoin lending with profitable interest rates
- Margin short positions to profit from downturns
- Staking income producing assets to earn platform fees
Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.
About Ooki
Ooki is a protocol for margin trading, borrowing, lending and staking enabling the building of Decentralized Applications for lenders, borrowers, and traders to interact with the most flexible decentralized finance protocol on multiple blockchains. Ooki is a fully decentralized, community-run DAO, governed by the community vote for all major changes to the protocol. Ooki users can engage in margin trading with up to 15x leverage using a fully decentralized trading platform.
