5 tips for investing during a global recession

The economy is facing an outlook bleaker than a Welsh weather forecast, and few are rushing to buy risk assets. Here are a few tips for weathering unfavorable market conditions.

Option #1: Save cash

There’s no shame in sitting on the sidelines and saving cash or stablecoins.

When bullish momentum returns, you will have plenty of dry powder to make big allocations. In the meantime, there are still lots of opportunities to earn yield across crypto markets as long as you trust the protocol you’re using.

But isn’t this timing the market, which is impossible? Possibly. But this is more about spotting momentum and general market trends as opposed to more focused price targeting or calling reversals. Larger trends are easier to spot. However, if that’s a bit risky, there’s another option.

Option #2: Dollar-cost average (DCA)

Have you ever been to a physiotherapist with a wrist or back complaint? You’re hoping for a quick and easy cure, but instead, you’re given a sequence of trifling, tedious exercises to do daily for three months.

Well, dollar-cost averaging is the investing equivalent of that. It’s not sexy or even very interesting but it has a very high chance of working out in your favor given a long enough time horizon. And these days, there are automated bots that do it for you, so that helps.

​​Related: 5 reasons 2023 will be a tough year for global markets

These first two options could be combined to create a strategy. For example, putting 50% aside in stablecoins waiting for bullish momentum to return, and putting 50% into the market in a price-agnostic manner. This tactic allows for some exposure to the market, which can help in resisting FOMO when the market rallies, even though your overall thesis remains bearish.

Option #3: Find assets that outperform

Decentralized perpetual exchanges have been the darlings of the bear market. Following the FTX scandal, traders flocked to decentralized options, crying, “where can I short?” Many went to protocols such as GMX and ApeX, which are up about 70 and 50% this year, respectively.

There will always be assets that outperform during bear markets but finding them is labor-intensive and going long during a downtrend is risky. So this strategy should be approached with caution and is best used by investors with the nous and experience to spot a good project and apply solid risk management.

Option #4: Use derivatives

There are many strategies using derivatives and combinations of contracts to ensure…