Recently, Bitcoin's price hit 77k USD, but what I feel around me is a much stronger bear market. New players are dropping out, the community isn't buzzing like before, and many traders are looking for new avenues.
Sometimes I get asked, how do people actually make money in crypto?
I've been in the game for 5 years now, and I want to break down the various ways to profit in the crypto space. I entered during the bull run in January 2021 when the price was around 28k, skyrocketing to 64k by April, a 128% gain in 4 months. Then it tanked to 31k, but by the end of the year, it rallied back to 69k, kicking off a double peak bull market.
Over the years, I've seen plenty of crypto traders making bank, but I've also seen many taking losses. Money is just shifting from one trader's pocket to another.
BTC price trend in 2021
1. DeFi players
In April of this year, many established DeFi projects were hacked, leading to a sharp decrease in the total value (TVL) of DeFi projects. In a bear market, it is becoming increasingly difficult to generate passive income through DeFi.
2020 was the "DeFi summer," with some projects offering APY returns as high as 20,000% in their initial mining phase. Now, the returns are very low, with some investment projects offering only 1%. The higher the APY, the greater the risk.
You're interested in the interest income, but the project team is interested in your principal.
2. Looting airdrops
In previous years, the returns from airdrops were also incredibly high.
Some airdrop farming studios, if they happen to catch a few good projects, such as DYDX, OP, $ENS , $ARB , APT, STRK, etc., can easily accumulate capital, and A7 and A8 are not out of the question.
Airdrops are no longer effective; many projects are even offering reverse airdrops, where investing 100,000 in interaction costs might only yield less than 100,000 in airdrops. As a result, more and more people are giving up on airdrops.
3. Part-time work on Web3 projects
In recent years, there have been many narratives in the cryptocurrency world, as well as numerous Web3 projects. These projects require staff for community operations and promotion, and some part-time jobs can earn several hundred dollars a month, allowing people to work while learning.
Many established projects have now shut down, making it even harder to launch new projects. There are no new narratives, and not many new projects are available.
4. KOL traffic monetization
In a bull market, many projects need promotion. Twitter accounts with traffic and followers can accept advertisements, with people willing to pay between $1,000 and $10,000 for a single tweet.
Back then, KOLs with followers could get advertising deals. Now, there are fewer projects, advertising rates are very low, and many people can't get any ads at all. Some projects even involve KOLs investing, only to have the projects fail and the KOLs themselves lose money.
Previously, it was common for KOLs with followers to charge 500-2000 USD per tweet, but now it's probably less than 100-200 USD, as projects are fewer and fees are lower.
5. Rebate Income
Previously, those who participated in rebate programs profited well due to the large overall trading volume. However, the market is now less active, with little activity, fewer people are trading, or some have lost all their money and stopped trading altogether, resulting in a sharp decrease in rebates.
In the past, you could get someone to trade just by posting a screenshot of their trades, but now you rarely see that anymore. There's not much trading volume and not much commission.
Previously, the median 24-hour earnings on the rebate leaderboard were often 1 BTC, but now it's only 0.2 BTC.
6. Making money through trading
Others are traders who make money through trading. Spot traders buy low and sell high, holding the position for the entire period, and then taking profits when the price is right.
Swing traders are finding it harder to make money now, as market trends are unpredictable and profiting is becoming increasingly difficult.
If you're trading contracts, you might make a profit in the short term, but one extreme market condition could wipe out all the profits from the previous 99 trades. Contracts eventually go to zero, so you'll never make any money in the end, with almost no exceptions.
7. Make money by following trending topics.
In the last bear market, although the market was sluggish and the price of BTC was low, there were still various ways to play, such as NFTs, BRC20, and memes on the SOL chain. Those who rushed in at the first time also made good profits.
For example, during last year's Alpha, some people earned A7, and it wasn't difficult to earn tens of thousands of dollars with multiple accounts. Now Alpha is no longer fun; the returns are low and the risks are high.
Many memes are short-lived, only popular for less than 24 hours before fading into obscurity.
In the recent hot prediction market, someone manipulated the Paris temperature-related market on Polymarket using a hairdryer, making a profit of $34,000.
By placing orders on the on-chain polymarket and influencing climate data offline, the player aimed to make their predictions win, thus profiting. I heard this player was later sued; I wonder if they face a fine.
Currently, the only people in the cryptocurrency industry who can still generate continuous income are exchange employees, as centralized exchanges (CEXs) continue to be profitable.
However, the entry requirements for exchange employees are quite high. For example, employees must be bilingual, able to travel, and face high performance pressure. Employee turnover is high, and those who do not meet the standards are eliminated. It is also a high-pressure job.
If you can stay in the crypto world for a long enough period and believe in the future of BTC, becoming a holder could potentially lead to passive income.
The long-term trend for BTC prices is upward. Although there may be fluctuations along the way, if you invest funds regularly and wait for the right time, you may be able to get a good return.
A prolonged bear market will wash away many wavering players; as the bear market deepens, more and more opinions will emerge in the FUD cryptocurrency community. We should choose what we are willing to believe and participate with funds we can afford to lose.
In his new book, CZ says that there will be more opportunities in the future than in the past.
The strategies from the previous cycle are no longer applicable to the current market environment, but by staying in the market, we can see more opportunities, and new strategies are also emerging.
There are many other ways to make money in the cryptocurrency world that I haven't yet learned about. Feel free to comment and interact!
I'm Chu Xiaolian, let's focus on the crypto market and the cryptocurrency community together.