How to Earn on Cryptocurrency with CoinDepo When the Market is Bearish
CoinDepo is a so-called smart profit platform that operates with crypto. It essentially offers several important banking features, including the ability to take a crypto loan or deposit your digital assets in a sort of crypto savings bank, earning interest in the process. It’s different from the usual way people earn money with crypto, and it can be effective.
There’s always a risk when it comes to entrusting your money to such providers, but CoinDepo has a well-established, positive reputation. It’s a new, innovative way to make money and can be very profitable.
You can even make money when the market is bearish using its integral borrowing function. One could name several decent methods, but shorting crypto assets is likely the best choice. It describes a way to make money from shrinking markets, which is actually a very popular way to speculate on tradeable assets.
Current Crypto Situation
Most crypto enthusiasts view crypto as a type of money, which it is. It can now be used to pay for goods and services, exchanged freely for fiat money or really just paid to someone. It’s an increasingly popular way to look at it with the gradually closer ties between the crypto economy and the regular economy.
Even traders largely view crypto as something similar to the Forex fiat currencies now – a more volatile type of money, but a type of money nonetheless. With shorting, however, it’s important to view the crypto you trade as an asset. It’s key to understanding the logic of this approach, and you might not grasp it fully otherwise.
It’s not incredibly tough, but it’s counterintuitive, especially compared to the usual way most people trade currencies.
Shorting is a way to earn money by speculating on the changes in the market price of your asset. In this case, the assets are big cryptocurrencies such as BTC, ETH, LTC, and more. While shorting these, you aim to earn money by exploiting the bearish downward trends in the market.
How does it work, exactly? The key part is that you trade using borrowed money, which is what CoinDepo is for. Here’s how shorting happens, step-by-step:
- You predict the value of a particular asset will decrease soon.
- You take a loan of that asset (say, 10 coins), valued at the market price (say, $100 apiece).
- You liquidate that asset immediately, obtaining $1,000 in cash.
- Under ideal conditions, its value will go down.
- When it reaches a certain desired level (say, $90), you buy your 10 coins back, now $90 apiece.
- You lose $900 from that buyback and return your loan.
- You’ve cleared your loan and still have $100 in profit.
That sounds incredible, a way to make money out of essentially thin air by keeping tabs on the market. However, it does have its risks. Despite the fact that CoinDepo does not have a fixed repayment period and does not penalize late repayments like most crypto exchanges, but it’s still a risk. If you predict wrong, you risk getting into a debt spiral.
That’s why, if you like the idea, you’re advised to take several safety precautions. Even if you have some of the best, most accurate signal providers in the world, you can still get unlucky. Thus, you shouldn’t short crypto if you don’t have some spare funds. Moreover, you should always have some money in reserve in case you need an urgent loan repayment.
Borrowing from CoinDepo
CoinDepo isn’t a crypto exchange. It doesn’t allow users to sell or buy crypto, but it is a good place to borrow or save digital assets.
The local borrowing mechanism is less harsh compared to the usual margin trading on popular exchanges. There, a series of margin calls following an unsuccessful shorting attempt can force you to lose a lot of money, including the assets that aren’t being held as collateral.
On CoinDepo, you can only borrow the amount of value represented in crypto valued at 50% of your collateral. The collateral is your portfolio of cryptocurrencies that you keep in the crypto savings accounts of this platform. The good news is that you can still earn interest from these collateralized funds (from 18% to 24% annually), which is the other big feature of this platform.
Since your loan limit is directly tied to your crypto portfolio in CoinDepo, and it can never exceed the collateral, you won’t really have to come up with an urgent repayment move, as is common with shorting strategies. If you fail to repay the loan, the borrowed amount will simply be deducted from your savings.
Another great thing about borrowing from CoinDepo is that your interest rate is always negative. Depending on what you’ve borrowed and what portfolio you entrusted to CoinDepo, the interest rates will differ. However, the interest this company owed to you will always be bigger than what you owe to them.
Thus, you really don’t have to worry about exceeding your collateral and having to pay extra for your mistakes or misfortune. That’s partially why they call CoinDepo a smart profit platform. If everything goes smoothly, everyone benefits from the exchange, with relatively little risk involved.
Shorting with CoinDepo
To short using the funds borrowed from CoinDepo, you need to follow these steps:
- Register a CoinDepo Account.
- Deposit some crypto assets and place them in CoinDepo Compound Interest Accounts.
- Borrow some assets of your choice – remember, you can only borrow 50% of the value of your portfolio in CoinDepo.
- Withdraw the borrowed assets from CoinDepo to any external wallet.
- Deposit the assets to one of the crypto exchanges via the wallet.
- Do some shorting, like described above.
- Return to CoinDepo to repay the loan.
Shorting, in general, is a pretty risky strategy. However, you can make it less dangerous by using providers like CoinDepo and setting some money aside for emergencies. Even if this platform doesn’t punish for any more than you owe it, you can still encounter some problems while shorting.