The Best Crypto Holding Stragedy in a Bear Market | by HookedonCrypto | Coinmonks | Aug, 2022 - Rvpg media

The Best Crypto Holding Stragedy in a Bear Market | by HookedonCrypto | Coinmonks | Aug, 2022

Automated Crypto Index Fund Graphic 2022

As crypto enthusiasts, we are just as comfortable holding and trading in a bear market as we are in a bull market. It’s August 2022 and we are still deep into “The Great Crypto Recession of 2022”, and many inexperienced traders have already gotten scared and exited their market positions. This article is for those that are holding through the bear market, hoping for a market correction. Diamond hand holders refuse to cash out, despite a potentially gloomy future for investors. Global financial markets are seemingly on the brink of a recession, and inflation is burning through investors’ fiat assets quicker than we can remember. We are all hoping that the overall crypto market decouples from the S&P 500 and goes back to the market highs we experienced in 2021.

For this to happen, mainstream retail investors will need to see the light — the light that is the blockchain and decentralized finance. As weaker markets around the world start to collapse, we will (hopefully) see large capital being transferred from more traditional investments into the crypto markets. This, however, will require a certain degree of regulation in the crypto market, which will start (and hopefully stop) at regulating Stablecoins.

Holding a majority of your crypto assets in Stablecoins such as USDC, USDT, and BUSD has been the best method to mitigate the market volatility risk during this bear market. Stablecoins have been (mostly) a godsend to those that like to avoid the volatility in their crypto investments. These stablecoins did not exist in early bear markets, and we were often susceptible to huge volatility, with nowhere to hide, with the only exit being a sketchy in-person fiat exchange planned through Localbitcoins

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Luckily, the crypto market has evolved quite a bit since 2015, and investors now have many options for hedging their bets and avoiding the scary market volatility that happens during a prolonged bear market.

KuCoin Rebalance Bot 2022

AI trading using bots is a relatively new introduction to the crypto trading market, and many are using these specifically programmed trading bots successfully. Using a trading bot through a centralized exchange seems like an inherently bad idea, however, as one would assume that the platform will program the bots in order to get the most profits for themselves.

There is, however, a specific bot on KuCoin that has become an essential tool in managing crypto assets. With the right settings, the KuCoin Smart Rebalance Bot is an incredible tool that allows you to hold crypto tokens, and still mitigate your risks, with the possibility to achieve great profits, and without worrying about losing everything in a highly volatile market.

What is the Smart Rebalance Bot?

Smart Rebalance is a classic strategy that has been used for decades in the traditional financial industry. The core of this strategy is to increase the total amount of assets by selling high and buying low, at the same time maintaining the portfolio basically unchanged.

When the portfolio imbalance exceeds the ratio or when the rebalance day arrives, the rebalance will be triggered. By selling coins with a high ratio and buying coins with a low ratio, the coin ratio will be adjusted to the targeted one.

In the short term, selling high and buying low will make some coins more, whereas others less, however, due to the market volatility, the total assets will increase.

The Principle of Smart Rebalance

To better understand how the Smart Rebalance bot works, here is an example.

Assuming that your Smart Rebalance bot consists of four crypto assets which are BTC, ETH, LTC and KCS. These four coins are equally sharing 25% value ieach. If the total initial value of the portfolio is 1,000 USDT, the value of each of the four coins is 250 USDT each.

Now lets make an example of the rebalance interval. If the interval that you set was 12 hours, and within the following 12 hours BTC has gone up, and ETH has gone down. When the rebalance timer of 12 hours arrives, rebalancing will be triggered and the exceeding amount of BTC will be sold, to make the ratio of the portfolio to 25% again for each of the four coins.

The Advantages of Smart Rebalance

With the trend of HOLDING strategy among crypto investors, Smart Rebalance has brought a new way to hold for investors, potentially increasing the return on holding crypto assets by taking advantage of rapid price fluctuations. When the price of the coin goes up reaching the targeted threshold, the Smart Rebalance bot will execute and distribute the additional value to other assets in the portfolio. Even if the price of the specific coin returns back to the original value before it has been rebalanced, the net profit has been achieved and naturally, the total amount of the assets increased. You can select up to 12 tokens according to your perosnal risk levels.

As mentioned above, these trading bots on centralized crypto exchanges are set up for the platform to make money, mostly by running as many trades as possible, cutting into your profits. This is why we recommend setting up your own parameters and tokens, rather than choosing their automated options. No matter what crazy APR shows in their list of top bot users, we can’t recommend going with these options. In our tests, it is most profitable for long-term holders to only auto-balance every 28 days— this almost eliminates all the trading fees associated with re-balancing every hour, or every day, as the platform tries to automatically sign you up for. Users must make these trading bots work for them, not for the platform!

Our Smart Rebalance Bot parameters

  • Auto-Rebalance every 28 days — 14 and 7 days are options as well and won’t eat into your profits too much. Remember if you have the maximum amount of tokens in your bot (12), you will be charged trading fees for each token every time the bot auto-rebalances, which will result in decreased profitability.
  • Stop Loss By Ratio of -10% (Notify) This gives us the decision to sell out of the bot into USDT without losing our bag in a worst-case scenario. We will only be notified of the loss, and purposely chose not to auto-sell, as some further market research should be done before willingly losing 10% of your initial investment.
  • Take Profit By Ratio +10% (Auto-Sell) to take profits in USDT when the market is pumping. This will sell everything into USDT and end the bot, but we can easily restart the bot after taking profits. On lower investments, we would change this to 15–20%.

You can see our settings and our 12 tokens of choice in this bot in the screenshot below. How you set everything up is totally up to you.

Our Smart Rebalance Bot Settings
  • Another tip is to make sure you are holding some KuCoin (KCS) token in your KuCoin Trading Wallet to save 20% on all trades, this option can be enabled within the settings in the app as “Pay fees with KCS” and enabling it. You can easily convert the smaller balances “dust” sitting in your trading wallet to KCS by clicking the option within your trading wallet.

Setup Instructions

  • These instructions are assuming you are using the KuCoin Mobile App

Using the KuCoin Android/IOS Application, tap on the “Trading Bot” icon on the home screen after signing up for an account.

Now tap on “Smart Rebalance”

From here you will be taken to the Smart Rebalance Bot interface. Tap “Start” at the bottom to start setting up your custom bot.

Now you will skip their auto-bots, and tap “Customize” at the top to start selecting your tokens and setting your trading parameters.

Now you will be able to select up to 12 tokens you are bullish on by tapping “Add Coins” once you have selected tokens of choice, you will be able to set a ratio for each coin, as well as the trading parameters. It’s up to you how many tokens you want to hold, how much you would like to invest into the bot, and what percentage you would like to allcolate to each token. We are currently holding 12 tokens we are bullish on, are investing around 1,800 USDT, and we have selected to hold an equal amount of each token.

Once you are finished setting everything up, tap “Create” at the bottom to start your bot. The bot will autoatically buy the amounts you have selected of each token at market rate, and within a few seconds your bot will be working for you.

You can see below our latest trading bot with roughly $1,800 invested, today the market is looking fairly bullish, and almost all of our selected tokens are in the green, except for BRISE, which is the black sheep of the bunch — a less established up-and-coming token, surely the riskiest of the bunch. We are already up almost $50 18 hours into the initiation of the bot. Not bad!

The large majority of tokens we have selected to add to our bot are fairly low-risk established alt-coins, as we are only feeling slightly bullish on the market lately — after holding most of our assets in stablecoins, that is of course, outside of our small pool we reserve for our Degen Defi gambling habits, since the beginning of the bear market back in Q1.

In Conclusion

We hope that you give KuCoin’s Smart Rebalance bot a try, and that it helps mitigate risks and earn you some passive income in this bear market. Holding stablecoins is no fun, but who has time for day trading when you have so many other responsibilities in life?

The KuCoin Smart Rebalance bot saves you from watching charts all day, and helps you scrape profits in a volatile market. We will be testing out some of the other parameters of the Auto Balancing Feature in the future, but we are currently playing it fairly safe- as we don’t want to lose any profits by having trading fees add up from constant re-balancing.

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