How to navigate bearish markets with the help of trading bots?

The crypto market has had a good year, recovering some losses suffered in 2022 during the latest crypto winter. While Bitcoin (BTC) broke above $31,000 on June 23 to update the year-to-date (YTD) high, the largest cryptocurrency by market cap still has a long way to go before it breaks above its record-high established at the end of 2021.

Following the impressive rally that pushed Bitcoin’s price close to $70,000 in November 2021, the market has been in free fall for months. The valuation of the premier cryptocurrency continued to drop until the end of 2022, tumbling to less than $16,000 last November.

The bearish pressure was fueled by significant crashes in the crypto space, including LUNA, Three Arrows, Celsius and FTX.

A multi-month bearish trend can be challenging for crypto investors, who’re mostly hoping for a long-term increase given Bitcoin’s deflationary model. A long-term price decline can be frustrating even for hodlers, who may feel some pressure to cash in at some point to avoid losses.

The good news is that Bitcoin and major altcoins have been recovering this year, and the end of June has been particularly generous, with the market expecting the first Bitcoin exchange-traded funds (ETFs) to be approved soon. However, even if there was no light at the end of the tunnel, crypto traders shouldn’t despair. Digital assets are volatile, and the market always has opportunities.

The best way to profit during a downtrend is to open short positions and leverage the price decline. Unlike stock traders, who have to take additional steps to short company shares, crypto traders can go long or short with the same ease.

Crypto traders may be interested in going short on Bitcoin or an altcoin when they expect the price to decline for a while. They must back their decision with reliable market analysis. To take the best out of a downtrend, it’s advised to open a short position when the market reaches an overbought state or breaks below a support level. Also, going short makes sense when the price action fails to break a resistance level repeatedly and starts departing from it.

Automating short trading can increase efficiency

While opening short positions can be done manually on crypto exchanges and derivative trading platforms, traders can automate their strategies with the help of special bots. For example, TradeSanta offers multiple algorithmic strategies and trading bots that can conduct most of the trading without human intervention. This eliminates the risk of psychological pressure, saves time, and increases trading efficiency.

The great thing about TradeSanta is that, besides its ready-made algorithmic strategies, it enables users to create bots from scratch and customize trading strategies. For example, users can create bots that automatically open short positions at predetermined price levels. The bots can also include risk management parameters, such as simple or trailing stop loss, simple or trailing take profit triggers, and TradingView stop signals.

TradeSanta’s account can be directly connected to a user’s preferred crypto exchange through API keys. In this way, if a user has an account with Binance, Coinbase, OKX, Kraken, Bybit or any other major exchange compatible with TradeSanta’s API keys, they can deploy the bots without moving their funds from the exchange. For convenience, TradeSanta also offers its proprietary trading terminal, which is free and intuitive. Traders can manage all their open positions and portfolios from one place.

With TradeSanta’s algorithmic trading, crypto holders can easily leverage bearish markets. The platform supports over 3,500 coins listed on the exchanges and regularly updates them once they appear on the exchange, so the short strategy works with any of these coins. For example, if a trader expects Bitcoin to continue its downward move, they can open a short position on the USDT/BTC pair by deploying the bot. It will automatically purchase USDT and set a take profit order based on the trader’s specified percentage, accounting for fees. The bot will wait until the Bitcoin price reaches the predetermined target and then repurchase it at the lower price. In this way, the trader ends up with the same amount of BTC while securing a profit in USDT.

Source: TradeSanta

Experienced traders can also leverage TradeSanta’s technical analysis tools to understand the price action better, identify small and larger trends, determine support and resistance levels, and interpret market sentiment. Last but not least, users can better manage their funds with TradeSanta’s crypto profit calculator. 

Source: TradeSanta

Besides the short and long strategies, TradeSanta users can leverage a community of active traders on its Telegram, where they can get support at any time, get regular market updates, and share their trading tactics and tips.

With TradeSanta, opening short positions is easy and secure. While the execution of short strategies is automated, traders can customize the whole process and set specific parameters to control their portfolios better. By leveraging tested trading bots, crypto investors can seek profits irrespective of the market trend.