9 Proven Strategies Used by Crypto Investors to Maximize Gains in Bull Markets

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31 Jan 2024

(How to build a profitable crypto portfolio)
Hello there! In this article, I will share nine secret tips used by Smart Investors to build profitable crypto portfolios, and how you can copy their strategies to make life-changing wealth in the next bull market.
But I am surprised that only a few crypto-influencers are talking about the importance of having the right mix of cryptocurrencies in your portfolio to prepare for the next bull cycle.
Instead, most crypto influencers are busy making unrealistic predictions about Bitcoin’s price for 2024. Remember, they made a $100K Bitcoin price prediction for 2021 that never happened. So, be careful.
But while they are busy making unrealistic predictions, I need you to sit tight and research the top 200 cryptocurrencies (excluding stablecoins).

With proper research, you can select a list of strong fundamental cryptocurrencies that can help you build a profitable portfolio to make life-changing wealth in the bull market.

You can find a list of the top 200 cryptocurrencies on the CoinMarketCap website.
But first, you may ask…
How Can I build a Profitable Crypto Portfolio?
(Courtesy: Crypto Bubbles)
Based on my experience, I will say that a well-balanced crypto portfolio should include various cryptocurrencies that have the potential to generate high returns on your investment. You can achieve this by investing in different cryptocurrency assets, such as:

Payment tokens like Bitcoin and Litecoin.
Smart Contract tokens like Ethereum, Cardano, and Solana.
Layer 2/Blockchain scaling solutions tokens such as Polygon, Cosmos, Avalanche, and Arbitrum.
Defi tokens such as Chainlink, Uniswap, and Aave.
Gaming and Metaverse tokens like Gala Games, Axie Infinity, MANA, or Sandbox.

In the later part of this article, I will provide more details on how to structure your crypto portfolio.

But, before that, let’s talk about the excitement that often accompanies cryptocurrency bull markets, which can ruin your chances of making maximum gains from your portfolio.
If you have witnessed any cryptocurrency bull market, then you will understand the importance of building a healthy crypto portfolio during the bear market to help you maximize profits in the bull market.

Unfortunately, your success as a cryptocurrency investor is not determined by how much unrealized gains you made, but by how much profit you took from the market.

During the 2021 crypto bull market, a lot of investors had over 100x unrealized gains, but they lost it all because of greed.
Now, I'm writing this article to warn you ahead of time because most of us have been in this situation. I know what you’re thinking: “That will never happen to me!”
But let me ask you this: How many cryptocurrency bull markets have you experienced?
If you haven’t witnessed the cryptocurrency bull-run euphoria, it’s easy to say, “I’m not greedy. I’ll take profit if my portfolio makes 2x gains.”

But here’s the thing: you need to experience the bull market to truly understand the power of greed.

Luckily, you might make 10–20x returns in the next bull market if you can hold on to those coins you bought at the bottom of the bear market.
But if you’re too greedy to take profits, you could end up losing everything.

Now, let me share my personal experience.

(A greedy investor. Image generated by Leonardo)
In January 2021, after the COVID-19 pandemic hit, I started investing in cryptocurrencies. I did some research and found a few coins that seemed promising.
I also talked to my friend William, who knows a lot more about cryptocurrencies than I do. He advised me to invest into different crypto assets to diversify my portfolio.
So, I did some more research and decided to invest in the following coins: Bitcoin, Ethereum, Litecoin, Cardano, Chainlink, Polkadot, Binance Coin, Polygon (MATIC), Solana, and Pancake token (CAKE).
I held onto these coins until I made a big mistake, which I’ll share with you in a moment…
With this portfolio, I made over 30x unrealized profits when Bitcoin reached $64K, and altcoins were still exploding.
But why did I call them unrealized profits? Some people might wonder why I didn’t sell my crypto portfolio at the peak of the market.
You see, that’s the greed factor in me! But I know it won’t happen again.

The Bull Market Euphoria…

When I realized that my portfolio was in huge profits, and I had made over 3,000% unrealized profits, the bull market euphoria took hold of me.
Remember, most crypto-influencers had predicted a $100K Bitcoin before the end of 2021. So, I was scared of missing out on the potential gains, hence; I refused to sell my crypto assets. But guess what I did next?

I said to myself, this might be a good time to buy more cryptocurrencies, so I wouldn’t miss out. But, this time, I didn’t have enough money to buy the cryptocurrencies of my choice.

So, I joined a crypto exchange, deposited my cryptocurrency assets as collateral, and took out a loan against them. This was the worst investment decision I made in 2021.
But, being a novice investor in the cryptocurrency market, I was blinded by my selfish desire to gain 100x returns from my investment. So, I ignored the early warnings of a crypto market crash.
Unfortunately, things didn’t go as planned. Because I over-leveraged my positions and used a part of the loans for my expenses.

Just a few days later, like a thief in the night, the May 2021 crypto market crash happened. I was away enjoying a vacation when it happened.

My creditor (the crypto exchange) sent a series of liquidation calls to my email, but I didn’t check on time. When I finally accessed the internet to check my portfolio, I got the shock of my life.
(How I got liquidated for being a greedy investor)
All my positions were liquidated, and I had less than 5% of my funds left in my portfolio. The experience was devastating. It ruined my vacation, and I lost almost everything.
Yet, I am grateful I didn’t lose my mind. I knew I had to start all over again.
That’s a story for another day. But for now, let’s continue.
Now, you can see that even as a beginner in 2021, I built a 30x crypto portfolio even though I lost it all. So, just think of how well my portfolio will perform in the next crypto bull market.
This is why you must pay attention to the rest of this article. I’ll share the steps you need to follow to build a profitable crypto portfolio. I’ll also teach you the common mistakes you must avoid.
So, let’s go…

Investment Criteria for Building a Profitable Crypto Portfolio Every Beginner Must Know!

Before you invest in any cryptocurrency, you need to do your research and understand basic cryptocurrency terms, such as:

Market Cap: This is the total value of all coins in circulation
Circulating Supply: This is the number of coins available in the market.
Total Supply: This is the maximum number of coins that will ever be created.
Fully Diluted Market Cap: This is the market cap based on total supply.

Visit the CoinMarketCap or CoinGecko websites to learn more.

You see, understanding these basic terms may not be enough to build a diversified crypto portfolio, yet they will help you evaluate the potential and the risk of any cryptocurrency you are interested in.

So, you need to follow some rules and strategies that I will share with you below.

The 9 Alpha Rules to Make the Most Gains from Your Crypto Portfolio

(Crypto Investment for Beginners)
Now that you know some basic criteria for investing in cryptocurrencies, you need to learn how to apply them in practice. Here are some rules and strategies you can apply to build a profitable and well-diversified crypto portfolio:

Rule #1: Don’t invest more than you can afford to lose.

If you want to attain financial stability or freedom through cryptocurrency investment, it’s important to keep your job and invest only a portion of your earnings during the bear market to build a profitable portfolio.
Yes, you should invest during the bear market and sell during the bull market. This is the simplest way to achieve financial freedom through cryptocurrency investment.
However, while doing so, ensure that you allocate only a percentage of your earnings that you are comfortable losing.
In my early days of investing in cryptocurrencies, I invested 10–20% of my salary for a period of time to build my portfolio, and you can do the same by staying committed to your goals.
Don’t be too aggressive with your investments, as it may take a longer time to make profits from cryptocurrency investments made during the bear market.

Rule #2: Use the 30–20–50 portfolio allocation rules.

This means that you should invest 30% of your funds in Bitcoin, 20% in Ethereum, and 50% in altcoins.
Please note that in a bull market, Bitcoin and Ethereum will probably bring the lowest returns. Yet they are the most popular and stable. So, it’s wise to invest a higher percentage of funds in them.
On the other hand, most altcoins will bring higher returns in a bull market, but they are less popular and more risky.
By having a mix of Bitcoin, Ethereum, and altcoins, you can create a balanced and diversified portfolio that may provide you with the best returns.

Rule #3: Don’t neglect the risk-reward ratio.

This rule applies when you are investing in cryptocurrencies during the bear market. You can use the dollar-cost-averaging method to minimize risk. I have written articles about this topic. You can find them on my page.

Rule #4: Don’t Put Your Eggs in one Basket.

To use this strategy, you can buy a mixture of Bitcoin, Ethereum, top-cap altcoins, mid-cap, and low-cap altcoins according to your risk tolerance.

But, don’t be emotionally attached to any cryptocurrency tokens if your goal is to make profits from them.

I know a few Bitcoin maximalists who believe you shouldn’t invest in any other crypto except Bitcoin. But, I chose to differ.
You see, my primary goal for investing in cryptocurrency is to make money, not necessarily to support the technology.
So, always remember that…

Your victory is defined by your own terms!

Rule #5: Sell in a Bull Market and Walk Away

If you have built a profitable crypto portfolio during the bear market, I would encourage you to sell a large percentage of your portfolio in the bull market. This will help you to earn good returns on your investment.
Just the same way you applied the dollar-cost averaging during investing, also develop the habit of taking partial profits consistently in a bull market.

Do not listen to any crypto influencers or YouTubers who discourage you from taking profits, as most of them are paid to promote certain projects.

So, be wise and save your profits in your bank account for the next bear market.

Rule #6: Don’t Ignore the Market Cycles.

Always remember that the crypto market goes through cycles of bull and bear markets.
But as a beginner, you might get caught up in the euphoria of a bull market after making significant profits.
You may feel tempted to follow the advice of popular crypto influencers who claim that “diamond hands never sell,” “Bitcoin is going to the moon”, “Bitcoin will never drop below $40K again”, and other lies.
Based on my experience, it’s wise to sell your cryptocurrencies and take profits when everyone around you is talking about Bitcoin. This is the earliest sign of market saturation. If you follow this advice, you will have many reasons to appreciate me!

Rule #7: Do Not Gamble with Your Crypto Assets in a Bull Market.

You see, while borrowing against your crypto assets is not necessarily a bad thing, but the timing matters.
If you stake your coins or borrow against them at the peak of the bull market, you risk repeating the mistakes I made in 2021, which I shared earlier in this article.
So, if you plan to take out loans against your cryptocurrency assets, it is best to do so in the early stages of the bull market to make the most of the loans. Otherwise, your position may be liquidated, and you may suffer losses.
It is also important to note that when you lock your coins on staking platforms to earn rewards, you won’t be able to sell them until the staking period elapses. This means you may miss out on the opportunity to sell at the peak of the bull market.
Remember, the essence of this article is to help you make the most gains from your crypto portfolio during the next bull market.
So, be cautious when staking or borrowing against your cryptocurrency, and always consider the timing.

Rule #8: Learn how to rebalance your crypto portfolio.

This strategy is simple, and your task is to restore your portfolio allocation to its original state of 30% Bitcoin, 20% Ethereum, and 50% altcoins.
To achieve this, you need to take profits from your best-performing coins and use the profits to buy the underperforming coins in your portfolio. This way, you can lock in your profits and buy more coins at a lower price.
However, it’s important to understand how money flows in the cryptocurrency market for this method to be effective.
During a bullish market, Bitcoin tends to move first, followed by Ethereum, macro/mid-cap altcoins, low-cap altcoins, and finally, meme coins.
So, this is the same way that money flows from Bitcoin to meme coins. By following this strategy, you can maximize returns on your cryptocurrency investment.
But the sad reality is that most beginners often sell the underperforming assets in their portfolio to buy the best-performing coins, which can result in losses and break the rules of managing a cryptocurrency portfolio.
So, don’t fall into this trap! Whenever you feel tempted to chase the pumps, remember what you read in this article.

To summarize my point, remember that in a bull market, money flows into Bitcoin first, followed by Ethereum, macro/mid-cap altcoins, low-cap altcoins, and finally, meme coins. So be calm when the altcoins in your portfolio are not moving along with Bitcoin.

Rule #9: Don’t forget the rules above!

In the next paragraph, we will discuss the different types of cryptocurrencies and their functions.

Types of Cryptocurrencies and Their Functions

(Top 10 Cryptocurrencies on CoinMarketCap)
We can categorize cryptocurrencies based on their functionalities and features. So, here are some examples:

Payment tokens: Bitcoin, Litecoin, Dash, and Nano.
Stablecoins: USDT, USDC, DAI, and FDUSD.
Privacy coins: Monero, Zcash, Dash, and Verge.
Smart contract platforms tokens: Ethereum, Cardano, Solana, and Polkadot.
Gaming/NFTs tokens: Axie Infinity, Decentraland, Enjin, and Sandbox.
Blockchain scaling solutions tokens: Polygon, Cosmos, Avalanche, and Arbitrum.
Exchange tokens: Binance Coin, BNB, FTX token (FTT), and KuCoin token (KCS).

Finally, it’s important to have knowledge of different cryptocurrencies, but don’t invest in all.
Here is my suggestion. Use this guide to select categories that interest you, such as Payment, Defi, Gaming/Metaverse, Layer 2, Smart Contracts, and Exchange Tokens.
While selecting your coins, always consider your risk tolerance and investment goals.