How to Exchange Crypto And Not Lose Money in a Bear Market?
2022.07.16 07:05
The bull market caused lots of new arrivals to the crypto scene. However, the trend has changed, and now they find themselves in a bear market. The latter is very different from the former, so much so that the inexperienced users need to adjust. We are here to help by explaining how using an instant crypto exchanger can help you save your digital money.
What is Wrong with Crypto Exchanges?
Cryptocurrency exchanges are the most popular way to trade digital currencies, both with newcomers and seasoned traders. However, there are evident issues with these platforms that call for an alternative.
The main problem is that rates can differ significantly from exchange to exchange, especially in periods of unrest on the markets (like on the screenshots above). This is because technically each crypto exchange is a market of its own, where different user bases set prices through demand.
Arbitrage is one of the few things that keeps the difference between rates more or less consistent. By definition, it is an act of using price differences on different markets to one’s advantage. When you are buying BTC cheaper on Exchange A to sell it for more on Exchange B, that is arbitrage. Nevertheless, trading fees and withdrawal fees make it tougher to trade like this. Finding the best exchange rate across all exchanges can be a pain but instant crypto exchange platforms can help with that.
These platforms scour a pool of centralized and decentralized exchanges to find a rate which is the best at the moment. You only need a single account, or even none at all, to make use of several crypto exchanges at once, which is extremely convenient.
On top of it, such exchangers tend to have a simplistic UI in contrast to over-complicated layouts of cryptocurrency exchanges that are overloaded with charts, order books etc. Despite this simplicity, you can still make use of the best current rate and make money on arbitrage. So in short, with exchangers you get an easier to understand interface, better rates and more anonymity due to the lack of an account.
Speaking From Experience: What Issues Did Influencers Have With Crypto Exchanges?
We asked a couple of influencers, what problems they have run into when using a popular crypto exchange? Their experience might be interesting for you.
The first comment is courtesy of Donald Lee, a host of CoursehackClub on YouTube. He gladly provided a detailed in-depth reply with insightful analysis.
Donald Lee (CoursehackClub):
I do NOT have problems with Binance or Coinbase (NASDAQ:COIN) right now, but I do have to give genuine words of warning to the readers. First of all, for Coinbase, know what is FDIC insured (i.e. fiat like USD). I am not buying any USDC because cryptocurrencies (including stablecoins) are not FDIC insured – that means if Coinbase goes bankrupt or becomes insolvent, you WILL lose your crypto on that platform. And in light of their recent layoffs, I’m keeping minimal funds with them (only enough to set in limit orders for dollar cost averaging into the cryptos I want).
BinanceUS has the same deal. I’m not too certain about Binance.com but I imagine that they also have fiat insured, but digital assets are not (readers are highly recommended to do their homework).
Since we seem to be going into recession, I have been urging my own audience to move all crypto from centralized exchanges to a Ledger and I’ve made a video to help. Trust in centralized entities right now is lacking with respect to all the liquidity issues and withdrawal pauses that had come to light.
If readers know how to use decentralized exchanges, I would use that over CEXes.
In summary, I would only deposit what I’m willing to lose with exchanges and only deal in insured fiat currencies (i.e. USD). No USDC, USDT or any stablecoins or crypto assets will be held on exchanges for me. It’s just too risky with their terms of service.
Cardano Hieronymus
We also asked the same question to a Twitter (NYSE:TWTR) personality Cardano Hieronymus (@CardanoHumpback) for a comment. While their experience is slightly different, they highlighted another issue of centralized providers:
Well, generally speaking, not your keys, not your coins. I never store my holdings on exchanges, so exchanges should be used only to buy and sell crypto with fiat currency. Immediately remove the coins from them, sending them to your non-custodial wallet. Some crypto exchanges will require many blocks to allow you to mobilize your funds after a withdrawal or a deposit: that’s to ease their internal funds management, but they often blame crypto networks for these delays. ADA on Binance often has been reported as “mainnet congestion, withdrawals are temporarily suspended” but mainnet was going through smoothly.
Why Should You Use an Exchanger in a Bear Market?
Let’s return to the question in the title and see how opting for an exchange platform can save you time and money. For example, let’s see how the ChangeHero crypto exchanger works.
First of all, you will not need an account to use their service. In that regard, it is similar to a DEX but unlike it, you will not need to connect it to your wallet, either. The tradeoff is that you will need to provide your addresses every time, but if you are using their iOS mobile app, it is also not an issue.
In addition, you have a choice between floating (called Best) and fixed rate modes. If you do not want your exchange output to be different from an estimation, even in your favor, just reserve a good rate for 15 minutes. Both these modes use the current best rate from the liquidity providers, anyway.
Last but not least, ChangeHero is non-custodial, so there are no deposit and withdrawal fees and you keep complete control over your funds. There are also no user accounts, so your personal info does not need to be disclosed to avail services. To cover network fees and trading fees where applicable, ChangeHero charges a fee of 0.5%.
Conclusion
The experience so far shows that the crypto market is moving in cycles. Trading crypto in a bear market is different from the same in a bull market, but either way anyone can do it conveniently with instant crypto exchange platforms. These are legit services that save you plenty of time, trouble and even money.
If you liked the infographic courtesy of ChangeHero, check out their blog for even more tips and guides, and give ChangeHero a follow on Twitter, Facebook (NASDAQ:META) and Telegram for live updates and even more content.
