One move that I never did before and which probably some did, was to take profits during the bull run and put the yields and proceedings into stablecoins to navigate the bear markets. This move not only that it ensures to provide passive earnings, but will get you a good stash to reinvest when the market is down. This would be a smart play in my opinion, even if it doesn't come without any risk associated to it. Let's not forget the LUNA stablecoin tragedy which probably ruined many crypto players. But with a little bit of diversification and wise choosing, that risk should be lowered and earnings still be provided. If you are in the crypto game, you need to play, just that we need to do that the smart way. And one way to do that it through extending our investments with volatile crypto assets into stablecoins.
Why move some of the investments into stablecoin? Well, foremost because they offer invariance in bull or bear times and still provide decent returns, well above inflation or other traditional financial instruments. So, let's see what benefits I see in choosing this path.
Risk mitigation
Selling crypto at its peak (or around it), it allows us to capitalize on the upper side value of the investment while minimizing the risk of potential price fluctuations. Cryptocurrency markets are known for their volatility, and by selling at high levels, we can lock in profits and protect the gains from potential market downturns.
Capital preservation
Converting crypto gains into stablecoins, mostly into those which are pegged to fiat currencies like the US dollar, provides a way to preserve the value of the investment. Stablecoins offer stability and reduce exposure to the price volatility inherent in cryptocurrencies, making them a safer option for storing profits over the long term. Not only that we take profits from crypto, but we continue to earn from those through stablecoins yields.
Income generation
By converting crypto gains into stablecoins, we can leverage various decentralized finance (DeFi) platforms or savings accounts that offer attractive interest rates on stablecoin deposits. This allows us to generate passive income on made investment while maintaining a low level of risk compared to holding volatile cryptocurrencies.
Opportunity for reinvestment
Selling crypto at its higher levels and converting the proceedings into stablecoins provides liquidity and flexibility for future investment opportunities. We can strategically allocate saved capital into other assets or take advantage of buying opportunities in the cryptocurrency market when prices are more favorable.
Peace of mind and financial stability
To be in crypto requires to have strong mentality and steady nerves, but stablecoins can alleviate emotions and bad feelings during bear cycles. Holding stablecoins derived from selling crypto can provide peace of mind and financial stability. Knowing that a portion of the investment is securely stored in a stable asset can lower concerns about market volatility and ensure a more predictable financial position.
And what a great option does HBD (Hive Backed Dollar) stablecoin offers for us. A crypto asset at Layer 1 level on the Hive blockchain, HBD still offers a steady and appealing return of 20% APR by simply holding your assets in the Savings account. Fast withdrawals in up to 3 days ensure liquidity availability for any strategical moves, while providing good returns even when we sleep. And as it is better to invest in what you know, probably I will put some decent amounts into that.