The crypto space has been one of the most volatile asset classes in the history of recorded markets. Most new asset classes are relatively unpredictable, at least till they find their value in society. However, the crypto space is not like any other traditional new market. Crypto assets and the ecosystem associated with them have a few distinct features. It is technologically new and challenging for most people to wrap their heads around. It is decentralized, with no regulators to control volatility and manipulation. It certainly looks like the early days of the Goldrush; uncontrolled yet providing exceptional financial opportunities for many. 

Most people who have been in the financial space for long enough, be it traditional, FinTech, or crypto, know that the state of stability can’t be reached by the markets themselves. Markets are bound to be irrational and reactionary at times. Some predictions are bound to be correct, others wrong. One cannot always make all the right calls. What is important to apprehend is that in financial markets, “stability” is often a state of mind, which holds even truer for the cryptocurrency ecosystem. 

There are a few strategies that people can follow to navigate the peaks and valleys of crypto markets while remaining financially stable and not getting caught up in the flux.  

  1. Stay Technologically Aware  

Staying on top of already developed products and the ones due to launch might be the most significant strategy for gaining financial stability, not only in crypto markets but also in any other emerging markets. The plain logic is that one must understand the products and services thoroughly before investing in them. Being up to date with the news and market cycles can prove highly beneficial. Staying ahead of the curve is of the essence in emerging markets.  

Crypto markets have numerous landmines filled with rug pulls, scammy ICOs, influencers who get paid to shill, and various other frauds. It is imperative to be cognizant of these ongoing dubious activities and the patterns that they follow. Financial stability can only be achieved by people who stay away from obvious scams.  

  1. Have a Clear Entry & Exit Strategy 

Getting an accurate perspective on a particular cryptocurrency can often be challenging. It is imperative not to overreact to sudden volatility in the market. Panic buying and selling are especially an obstacle with newcomers to the market leading to a lack of faith and “FUD” (fear, uncertainty, and doubt). Newcomers and the less informed have less faith in the crypto space making them highly susceptible to FUD. This predicament leads them to make a common mistake of being reactive only when a particular coin makes the popular news cycle. 

Investing in projects that have gained one’s trust can be the key to HODLing. However, building trust in the crypto space is not natural or intuitive. One must understand the entire ecosystem to truly know and trust a project. Thorough research about the Whitepaper, the founders, tokenomics, roadmap, and competitors helps people build trust. Following the associated Subreddits and official Twitter handle helps too. 

Having an entry and exit strategy is crucial to achieving financial stability. After thorough research, one should know the exact price point they want to get in on the action, and the point they want to reach to earn profits.  

  1. Keep a Diverse Portfolio 

Not all cryptocurrencies promise the same rate of return over a similar period. Low-cap projects have the potential to go 10-20x or more. There are mid-cap projects that have 5-6x potential. And finally, there are large-cap projects that have much less growth potential.  

There are a few factors to be considered which make the distribution of portfolios between the low-cap, mid-cap, and large-cap projects complex. Low-cap projects can sometimes be scams. It can easily be replicated and replaced by a competitor. In other words, they are risky. Mid-caps have relatively lower risk since they are usually well-established with a pre-existing user base. Large-caps have relatively low risk.  

One must assess their own risk appetite and ideally have a portfolio of coins from all 3 segments.  

  1. Earning Passive Income 

Multiple options are available for a crypto holder to earn passive income, a practice considered better than leaving those assets stored in a wallet. 

Lending cryptocurrency: The basic principles of lending crypto are the same as traditional cash loans, where the borrower pays interest to the lender. Crypto lending is attractive because it ensures passive income by avoiding the volatility of the crypto market and having a relatively high-interest rate, often higher than traditional lending.  

Dividends: Dividends are a classic way to earn passive income. Some popular dividend-paying cryptos include Tezos, Cosmos, VeChain, and NEO. The benefits of getting dividends in cryptos are that they are fairly steady and unlike other profit distribution mechanisms like airdrops, they do not dilute the overall value of the coin. 

Staking: Staking is quickly becoming one of the most popular ways to earn passive income from cryptos. For people who hold cryptocurrencies that operate on proof-of-stake, the option of staking their coin is available. When individuals stake their coins, they are essentially lending their assets to the network to validate transactions. In exchange for lending your coins and helping validate, the network rewards with additional coins – effectively allowing the people who stake to earn interest. 

5. Mining  

Mining cryptocurrency is one of the original ways to earn rewards in Bitcoin and other cryptos. Mining involves using massive computing power to solve complex mathematical problems and verify transactions, requiring the cryptographic expert to share their “proof of work” demonstrating the solution. In exchange for this “work,” the fastest miner to solve the puzzle is rewarded with crypto coins or tokens.  

However, finding a profitable mining strategy can be a task in and of itself. There are several factors to consider before one starts mining, starting with which cryptocurrency to mine. The mining hardware limits the choices. Even high-performance GPUs can’t compete with ASICs for many currencies like Bitcoin. Additionally, some GPUs work better for mining particular cryptos than others. Then, one of the biggest factors to consider is cheap electricity. If solar or any other source of cheap electricity is available, then mining has to be done from that source.  

After choosing the right hardware and a relatively cheap power source, one needs to factor in mining difficulty, the block rewards, and the current market price. These three factors can be the key in determining mining profitability.  

For an individual miner, particularly newcomers in this space, analyzing and optimizing all these factors can be overwhelming. This is where enterprises like Mining City come in. Mining City is one of the most prominent businesses offering computing power called hash power to its users. On the Mining City platform, you can choose the most suitable mining plan among several options and enjoy access to advanced crypto-mining solutions. 

Whatever the strategy might be to find financial stability in these volatile crypto markets, it is of the essence to remember that financial stability can only be achieved through a clear mind and trust in the system. To obtain that, one needs to stay well-informed, data-driven, and smart with their investments at all times.