A bear market makes the same offer to every holder: sell now and lock in the loss, or sit still and wait. Many long-term holders picked “sit still” years ago and have felt uneasy about it since. There’s a third option, and it’s less exciting than either: put part of what you hold to work for modest, steady income while you keep your long-term exposure.
That option comes with real risks, and in a bear market they bite harder. So this guide covers what a bear market actually is, which income strategies exist for Bitcoin and Ethereum holders, what the numbers have looked like in 2026, and how to avoid the mistakes that turn income plans into forced sales.
Overseasdefiaccelerator.overseasdefi.comExplore Crypto Income Without SellingOverseasDeFi teaches Bitcoin and Ethereum holders income strategies, risk management, and how to keep control of their assets.Explore the Daily Yield SystemTL;DR
- Bear markets are better at rewarding income than price-chasing, but yields are modest: Ether staking paid roughly 2.5% to 4% a year in March 2026, and major DeFi stablecoin deposit rates dipped below 2% in early 2026. Both rates move.
- You can stay invested and still raise cash by borrowing against your crypto, but borrowing is where bear markets hurt people, through liquidation.
- Keep loan-to-value (LTV) low, watch your health factor, and stress-test your position against a severe further drop (for example, another 50%) so a fall doesn’t force your hand.
- Income yield doesn’t cancel price risk. A 10% yield still leaves you behind if the price falls by roughly 10% or more.
- Start small, write down your exit plan before you deposit anything, and treat any quoted yield as a variable, never a promise.
Table of Contents
- What actually counts as a crypto bear market
- Why income matters more when prices stall
- Ways to generate income without selling
- A worked example, with made-up numbers
- How to keep a bear market from liquidating you
- Yield doesn’t cancel price risk
- How much income is realistic?
- A starting plan for the next 30 days
- Where we fit
- FAQ
- Sources
What actually counts as a crypto bear market
In stocks, a 20% drop from a peak is the usual line. In crypto, that line is too tight to mean much. Research from Sygnum argues that a move that would be a bear market in equities is just a correction in crypto, and defines a crypto bear market as a fall bigger than one standard deviation of average three-month volatility.
A more common framing is the four-year cycle, a model covered in The Block’s glossary. In past cycles, Bitcoin bear markets fell roughly 75% or more from peak to trough over about a year, though the drawdown since the October 2025 peak has so far been shallower.
Why does this matter for income? Because the label changes your behavior. If you think a 20% dip is a bear market, you might scramble into something rash. If you understand that 20% swings are routine, you can build a plan that survives them. We’d rather you decide based on your own numbers than on a headline.
One honest caveat: nobody can tell you where we are in the cycle with certainty. Analysts disagree, and some have called the current stretch a crypto winter for a while. Plan for a range of outcomes, not a forecast.
Why income matters more when prices stall
When price goes up, holding is enough. When it doesn’t, the only return you get is what your holdings produce. In CoinDesk Indices’ Crypto Long & Short newsletter, guest author Ruchir Gupta of Gyld Finance argued, in effect, that bull markets reward beta, bear markets reward income. He also describes the market slowly moving toward something like a fixed-income market for crypto-native yield.
There’s also a lot of unused capital out there. A DefiLlama-hosted research report from March 2026 found that 93% of the crypto treasury wealth it analyzed was sitting idle. Those are protocol and DAO treasuries, not individuals, but the pattern will look familiar to anyone with a wallet full of coins they haven’t touched since 2021.
For a family, the question is practical. Maybe it’s covering a tax bill, a tuition payment or a few months of expenses without selling coins you intend to hold for a decade. Income from holdings can do that job. It just needs to be sized for the job, not for a fantasy.
Ways to generate income without selling
There are three broad routes. Each trades something for its yield.
Staking
Staking means locking proof-of-stake coins, like ETH, to help secure a network in exchange for rewards. It’s the simplest of the three, but the numbers are small. CoinDesk reported in March 2026, in a guest newsletter piece, that Ether staking returned roughly 2.5% to 4% annualized at the time, and that the validator entry queue was running over two months, so new deposits at that time waited more than 60 days before earning. Queue lengths change.
Bitcoin doesn’t stake natively, so Bitcoin yield products are built differently. One example described by crypto.news targets about 2.5% net annualized through a covered call options strategy. That 2.5% is a target once fully deployed, not a result, and the product adds custody, derivatives and counterparty risk, plus capped upside, on top of Bitcoin’s price risk.
Lending and liquidity pools
Lending pays interest on deposited assets. Liquidity provision pays you trading fees for supplying two assets to a pool. Both can produce yield, but rates move. Gate News reported in March 2026 that major USDC and USDT deposit rates on Aave V3 had fallen below 2% while the 10-year U.S. Treasury yield sat around 4.24%. Rates have moved since, which is exactly why any quoted yield should be treated as a snapshot. When Treasuries pay more than on-chain dollars, the on-chain yield has to justify its extra risk.
Liquidity pools add a quirk called impermanent loss: when the two assets in a pool move apart in price, you can end up with less value than if you’d just held them. Think of it as a tax on being the shop that sells whatever customers want to buy. We walk through it in our guide to impermanent loss and run a 15-minute pre-deposit check you can use before putting anything into a pool.
Borrowing against your crypto
This route appeals to many holders, because it addresses the “I don’t want to sell” problem head on. You deposit BTC or ETH as collateral and borrow dollars or stablecoins against it. You keep your upside exposure, and you get cash.
DeFi borrowing is typically overcollateralized, meaning you post more value than you borrow. For one protocol’s description of how its borrowing works, see Notional’s guide to fixed-rate borrowing. Overcollateralized is the safety margin, and it’s also why a bear market is dangerous: your collateral can shrink while the debt stays put.
In the US, loan proceeds are generally not treated as taxable income because they must be repaid. For a lender’s perspective, see SALT’s explanation; SALT is a crypto lender, not a tax authority. Tax treatment depends on your jurisdiction and situation, so confirm it with a CPA before acting. Our overview of accessing cash without selling BTC or ETH covers the US framing, and the tax on crypto rewards guide explains that staking and similar rewards are a different matter from loan proceeds.
A worked example, with made-up numbers
This is an illustration, not a client result or a forecast.
Say you hold 2 BTC worth $200,000 in total, and you want $30,000 of cash for the year. You borrow $30,000 against the 2 BTC. Your LTV is 15%.
Now the market falls 50%. Your collateral is worth $100,000, and the same $30,000 loan sits at 30% LTV. You’re uncomfortable, but well below typical liquidation thresholds, though these vary by platform. (Interest also adds to the debt over time, so real LTV drifts higher than this simple example shows.) Compare that with someone who borrowed $120,000 against the same coins. Their LTV starts at 60% and hits 120% after the same drop. They would have been liquidated long before.
The gap between those two people isn’t intelligence. It’s the size of the loan relative to the collateral. Our guide to stress-testing your LTV lets you run this math on your own holdings.
How to keep a bear market from liquidating you
Liquidation is the main way income plans go wrong. When your LTV climbs past a platform’s limit, your collateral gets sold, usually at a bad price and with a penalty. Variable borrow rates can also spike during liquidity crunches, so your costs can change too. Felix’s documentation explains how one lending product works.
Practical rules:
- Borrow far below the limit. Borrow well below the platform’s liquidation threshold, and stress-test your loan against a severe further price drop before you take it.
- Watch your health factor. On lending platforms that show one, many users aim to stay comfortably above the liquidation threshold, and check it more often in volatile weeks.
- Set alerts. Don’t rely on remembering to look. Our guide to portfolio tracking for DeFi borrowers covers what to monitor.
- Keep a reserve. Hold some stablecoins or extra collateral so you can repay or top up fast instead of selling at the bottom. See collateral management.
- Know your debt-reduction plan. Decide in advance what you’ll do at each LTV level. Our pieces on reducing debt in DeFi and how liquidation works help here.
And the ordinary risks stay: smart contract bugs, stablecoin depegs and wallet mistakes. Run through our wallet security checks and read about stablecoin risk before you move anything. As a side note, protecting assets outside crypto matters too. If you own rental property, insurance is a separate layer of protection, and guides on build to rent insurance essentials cover that topic.
Yield doesn’t cancel price risk
This is the part people skip. Cryptonews points out that staking typically earns around 3% or more a year, and that a 10% yield loses money if the price falls by more than 10%. Income lowers your cost of waiting. It doesn’t protect the principal.
That’s why we frame income as a way to hold with intention rather than a way to beat the market. If you believe in your coins over a long horizon, modest yield makes the wait more bearable. If you don’t, no yield will fix that.
How much income is realistic?
Honestly, less than the internet implies. With staking in the low single digits and stablecoin deposit rates under 2% at points this year, anyone promising daily double-digit returns is selling something, or is taking risks they aren’t naming. We don’t promise returns, and our education doesn’t either.
A more useful question than “how high can the yield go?” is “how much cash do I need, and what’s the lowest-risk way to get it?” Sometimes the answer is a small loan at low LTV. Sometimes it’s a modest staking position. Sometimes it’s doing less. Our guide on sizing income positions and our income withdrawal strategy are built around that.
A starting plan for the next 30 days
- Write down your goal in dollars per month, and for what.
- Decide what share of your holdings you’d put to work. Many people start with a small slice.
- Pick one strategy and learn its failure modes first. Our overview of earning yield without selling is a good starting point.
- Test with an amount you can afford to lose.
- Write your exit plan before you deposit. See exit strategy for DeFi.
- Check taxes with a CPA who knows crypto.
Where we fit
OverseasDeFi is education, tools and coaching. We don’t hold your funds or manage investments for you, and you make your own decisions. Our Daily Yield System is an educational framework for assessing whether borrowing against BTC or ETH and deploying funds fits your circumstances, with risk management in mind. We teach wallet security first, before any income strategy.
Community and Accelerator offer different levels of support, including portfolio tools, a portfolio-aware AI coach and live guidance. See the Accelerator page for details.
If you’d like to look around first, our free guides are open, and you can see both programs on our home page. No pressure. Come when it makes sense for you.
FAQ
Is crypto in a bear market right now?
It depends on the definition you use. Some analysts have described a prolonged crypto winter, while others measure bear markets by volatility rather than a fixed percentage. Check recent price data against the definition you trust, and plan for either outcome.
How can you make money during a crypto bear market?
The main ways are staking, lending, providing liquidity and borrowing against holdings to fund cash needs, each with its own risks. Returns are often modest and variable. Our approach focuses on income while keeping long-term exposure, with risk management first.
Is a 20% drop a bear market in crypto?
Not necessarily. In crypto, 20% moves can happen within a bull market, and some research treats them as ordinary corrections. In past four-year cycles, Bitcoin bear markets fell roughly 75% or more over about a year, though the drop since the October 2025 peak has so far been smaller.
Is borrowing against crypto safe during a downturn?
It can be managed, but it’s where downturns do the most damage. Keep LTV low, watch your health factor, hold a reserve and have a repayment plan, since a large price fall can trigger liquidation of your collateral.
Sources
- Sygnum Research: Bull market corrections
- The Block: Bear Market glossary
- CoinDesk: When price stops working, yield starts mattering
- DefiLlama research: Keyrock treasury report
- crypto.news: How to earn yield on Bitcoin in 2026
- Gate News: DeFi enters a winter of yields
- Notional documentation: Fixed rate borrowing
- SALT: Crypto-backed loans
- Felix documentation: How it works
- Cryptonews: What is a bear market in crypto