Last Updated on May 21, 2022 by Diana Kelley
Many crypto-enthusiasts are wondering – what is happening to the market? What are the reasons for such a collapse? But most importantly, what to do to keep and even increase crypto assets?
In this article, we will tell you about the situation in the cryptocurrency market, the reasons, and tell you about effective tools and tactics that will help you to earn on cryptocurrency even in the hardest times.
What is happening right now?
The crypto market has been falling for the seventh week in a row now. Bitcoin is down 39% and has reached its historical low of $26.7k.
Meanwhile, the situation with UST and LUNA going down has also become downright critical. UST has not attached to the dollar anymore, with the LUNA token going to basically zero. It did survive a clinical death but hasn’t come out of its coma still.
There are many reasons for this:
A strong rise in inflation around the world, the heated political situation, the fall of U.S. stock indices, a stricter quarantine due to the new strain of covid in Beijing, and the overall panic have caused people to withdraw their assets.
At first glance, the situation might look catastrophic, but any experienced crypto investor knows that the market is constantly changing, sometimes showing huge growth, and sometimes falling to the lowest and that’s normal, especially in crypto. Crises are not the end, but a time of new opportunities. In this article, we will tell you how to use the market situation to your advantage.
New Opportunities
Every coin has two sides. On the one hand, a fall in the market could mean financial losses and new risks. On the other hand, a market drop can be seen as a big sale. So this is a great opportunity to buy your favorite assets at a minimal price and build a crypto portfolio without huge investments.
But then what? How to protect your assets from further risks?
There’s a simple and effective mechanism – a crypto-loan.
What is a crypto loan?
It’s the same as a regular loan, minus the bureaucracy, complicated procedures, and any background checks. To get a loan, you only need crypto as collateral and a phone number.
The amount of collateral is calculated by the LTV (loan to value) ratio – the share of the loan in the value of the collateral. If the rate of the pledged currency suddenly goes down (or if the rate of the loan currency goes up), then the LTV will go down.
The size of the loan depends on the collateral coin: the more the cryptocurrency in price, the higher the loan amount can be.
The main advantage of the loan is that the rate of the pledged funds is “frozen” and you get liquid funds that you can use for further actions.
Taking a loan from CoinRabbit is very easy – you do not need to go through KYC or provide documents, you only need the collateral currency. You can close the loan at any time convenient for you, it is not tied to time limits and amounts.
How can loans help you benefit?
Let’s look at three different situations
The market is going up fast
- Take out a loan and get liquid funds
- Invest the funds in other assets
- Your assets increase in value, allowing you to close the position at a profit
- Later, you can reinvest your assets and get the collateral back
- And since the collateral also increases in value, and the cost of redemption remains the same, you get double profit
- Profit! You’re great
The main advantage is that you set your own terms. You can borrow for a day or two, or you can start playing the long game. It’s up to you.
A slow-growing market
- You take out a loan and get liquid funds
- You invest in an asset that will grow over the long term. Often these are the coins that have a strong community, strong technological component, and broad applicability
- You survive all the ups and downs of a coin because we play the long game
- And after a while, you make a profit
The main benefit is that the loan is open-ended. So you can confidently make long-term plans and not worry about closing the loan.
Rapid Market Falling
- You take out a loan and you get liquid funds
- The currency exchange rate went down but because the price of the loan stays the same the value of your liquid assets is growing
- The risk of liquidating such a loan is minimal, but even so, you can always reduce the cost of liquidation and preserve your assets
- After you close your loan you get a profit because of the difference in the exchange rate.
Bottom Line
As you can see, any crisis is an opportunity for growth. And we at CoinRabbit find and provide these opportunities to our clients.
