Top 5 profitable strategies for cryptocurrency trading

Bitcoin is approaching the £100,000 mark and is eyeing new heights! This ascent is energising the entire crypto market and, with the possibility of a new bull run in the cryptocurrency market, it's natural for everyone to wonder which strategy to adopt to achieve the best possible gains. In a highly volatile crypto market, the question of when to sell is on everyone's mind, and only the clever—or lucky—ones who sell at the highest point will succeed. So, which profitable strategy should you adopt to maximise your profits in the cryptocurrency market?

#1 - The long-term HODL strategy

The term “HODL” first appeared in December 2013 on the Bitcointalk forum to describe a strategy of holding onto bitcoins. Originally a typo for “hold,” it became famous in the cryptocurrency world and was later turned into an acronym: “Hold On for Dear Life”. In short, the idea is to keep your digital asset for as long as possible, without selling or trading.

For Bitcoin in particular, which has consistently reached new all-time highs over the years, this passive strategy is clearly winning.

However, be cautious, as this strategy does not work for all cryptocurrencies. It should be prioritised for major cryptocurrencies with the highest market capitalisation, as they are the most well-known and represent solid projects: Bitcoin, Ethereum, Solana, XRP, etc. In contrast, altcoins, meme coins, and lesser-known cryptocurrencies, which are particularly volatile, do not seem suitable for this strategy, as they may experience temporary hype before disappearing.

#2 - Project Investment

This strategy involves positioning yourself in cryptocurrencies that stand out fundamentally. It’s about selecting the best projects with innovations that create value in the medium and long term. Innovations may include faster transactions, a more secure network, the implementation of layer 2 solutions, solving scalability issues, etc.

On one hand, this category includes the solidity of major cryptocurrencies, with Bitcoin and Ethereum leading the list, but also XRP and Solana. It is important to understand what differentiates cryptocurrencies from one another, such as use cases, characteristics, the experience and skills of the development team, and community support. This category also includes thematic cryptocurrencies (gaming, AI, etc.).

In any case, as with any stock investment, diversification should be the rule. Not putting all your eggs in one basket helps mitigate the risk of poor performance from a specific altcoin.

#3 - Momentum and hype investment

This strategy involves riding the wave of strong bullish trends. Fundamentals are less important as long as profitability is high. Therefore, it is a strategy for experienced traders, as it requires identifying strong bullish momentum and capitalising on it. Meme coins perfectly fit this strategy, as they often experience significant hype for various reasons. Pepe, Doge, Shiba, in particular, have seen exponential increases, and these rises continue to reoccur. The goal here is to select the best technical candidates, making an analysis of price history with chart supports and identifying support and resistance levels recommended.

In any case, the crypto market is particularly volatile and partly unpredictable, so it's crucial to secure your gains or limit your losses with “stop loss” orders and “trailing stop” orders.

During a bull run, it's not uncommon for a crypto’s price to double, triple, or even more. It's also frequent for consolidations of 30%, 50%, or more to occur. Following the trend while progressively securing your gains is imperative.

The “altseason” refers to the period when secondary cryptocurrencies outperform Bitcoin and other major cryptos. Bitcoin’s dominance decreases, and monetary flows shift towards lower-capitalisation cryptocurrencies. According to this theory, there is first a Bitcoin momentum, with strong dominance of this cryptocurrency, followed by a reorientation of funds towards altcoins, which then experience significant increases. The idea is to seize the opportunity from both waves of gains: first on Bitcoin and then, using the profits made from Bitcoin, to benefit from the shift towards altcoins.

Also read: How to ensure a broker is legitimate before registering

#4 - Have a plan and stick to it

Whether you decide to weather the storms of volatility without touching your digital assets or choose to trade different momentums with swing trading, you need to consider your strategy, investment horizon, exit objectives—essentially, have a plan and, most importantly, stick to it.

To this end, studying the duration of previous cycles of rise and fall will be beneficial. This will allow, for each cryptocurrency, to set profit-taking objectives according to various scenarios: a pessimistic scenario (imperative stop loss), a reasonable or realistic scenario (initial profit-taking), and a favourable or optimistic scenario (stronger profit-taking and trailing stop loss).

Keeping up with both micro, such as the evolution of projects related to specific cryptos, and macroeconomic news is also extremely important. The market is very sensitive to the macro environment, and the trigger for what is appearing today as a new bull run is none other than the election of Trump, who has positioned himself in favour of cryptocurrencies.

#5 - The DCA strategy for both entry and exit

Knowing when to exit is the key to success in the crypto world. It’s what differentiates a profitable investment from a dry loss. How many novice traders have seen their portfolios soar and then plummet without having seized the opportunity to take their gains when it was necessary?

An interesting option is Dollar Cost Averaging (DCA), which involves entering the market in multiple installments with the same amounts, thereby reducing the impact of volatility. Similarly, since no one can accurately predict the peak of a market, it may be wise, once your realistic target is reached, to exit your position in several stages.