Looking for the best crypto trading strategy to maximise your portfolio’s performance? Much like the recipe for Big Mac sauce, no one truly knows it. However, here are five of the top-performing strategies from the past!
There are countless unanswered questions in the world. What is the real name of street artist Banksy? What’s the recipe for Big Mac’s secret sauce? How much money did Pablo Escobar hide in the hills surrounding Medellin? How were the Egyptian pyramids built? But none compares to the one that haunts crypto trading strategy enthusiasts daily: What’s the perfect strategy? What does the ultimate, unbeatable portfolio look like? Which cryptocurrencies does it hold, and in what proportions?
Since it’s impossible to pinpoint a definitive answer, we’ve reviewed several popular crypto trading strategies to find the ones that have delivered the best returns with a manageable risk over time. Discover the top five strategies in this article! P.S. All these strategies outperformed the S&P 500, with at least double its percentage increase.
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1. Market Cap Weighted – Allocating by Market Capitalization
Why not start with its decentralised counterpart when looking for crypto trading strategies that have beaten the S&P 500? A “cap-weighted” portfolio is created by distributing your investment among the top 20 cryptocurrencies by market capitalisation, excluding stablecoins. This means the percentage invested in each currency corresponds to its market value. As of the time of writing, this strategy would see 56% invested in Bitcoin, 14% in Ethereum, 3.7% in BNB, 3% in Solana (SOL), and so on.
From January 2023 to August 2024, this crypto trading strategy saw a 144% increase, and during Bitcoin’s peak at $74,000 in March, it hit nearly 200%.
2. The Classic Combo: 80% Bitcoin, 20% Ethereum
This is the most popular crypto trading strategy, recommended by many long-time investors in the space. However, you should keep this one a secret from Bitcoin maximalists, as they believe BTC is the only legitimate cryptocurrency. Regardless, the 80% Bitcoin and 20% Ethereum duo have proven highly effective over the last 20 months, with a notable gain of over 190%.
3. Bitcoin Maximalist: All-In on the King
Bitcoin remains the most well-known cryptocurrency; for many, it’s the only one that truly matters. Over the past year, Bitcoin’s strong returns and relative stability compared to other cryptocurrencies have reinforced this belief. From January 2023 to August 2024, Bitcoin saw a price increase of 226%, and during the March peak, it surged to 350%.
4. Buy the Dip – “Catching a Falling Knife”
This strategy is the most complex in this article, but it’s worth discussing as it’s widely used by crypto trading strategy enthusiasts—sometimes without fully understanding its nuances. It requires an active approach to trading, unlike simpler “buy and hold” strategies. Success depends on timing and buying during market dips.
Suppose you started with a budget of $5,000 in BTC and $5,000 in stablecoins, intending to buy more BTC whenever its price dropped by more than 10%. If executed perfectly, this strategy could have turned that $10,000 into $48,000 by the end of the year.
However, this is easier said than done. Buying during market downturns is tough, both mentally and emotionally. It requires nerves of steel, patience, and a solid understanding of market trends. If you’re not experienced, a more straightforward recurring purchase strategy might be a better fit.
5. The Creative Combo: 60% Bitcoin, 20% Ethereum, 20% Solana
Finally, look at the most successful crypto trading strategy from the last few months. This portfolio comprises 60% Bitcoin, 20% Ethereum, and 20% Solana (SOL). While 20% may seem like a modest allocation, this portion has propelled this strategy to incredible heights. Since January 2023, this portfolio has seen an impressive 620% gain.
While we can’t definitively answer which strategy is the best for crypto trading, these five strategies have performed exceptionally well with a reasonable level of risk. More exotic portfolios may have delivered even higher returns, but these are often unsustainable in the long run. You can find most of the mentioned cryptocurrencies on platforms like Coinbase or Binance, so dive in and start your journey into crypto investing!
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