In the cryptocurrency market, the coexistence of high volatility and high returns attracts global investors. However, this market has also become one of the most complex financial battlegrounds globally due to information asymmetry, regulatory uncertainty, and technological risks. This article will analyze the core logic of making money in the crypto space from three dimensions: strategy construction, risk management, and the application of technical tools, and provide a practical operational framework.
1. Strategy construction: From passive speculation to active value creation
1. Value investment strategy: Anchors through bull and bear markets
Fundamental screening: Filter projects with real application scenarios through indicators such as white papers, on-chain data, and community activity levels. For example, Ethereum (ETH) has long occupied the second position in market value due to the expansion of the DeFi ecosystem; Solana (SOL) has become a popular chain for NFTs and GameFi due to its high throughput.
Valuation Model: Use metrics like Network Value to Transactions (NVT) and Price-to-Earnings (P/E) ratios to position based on industry cycles. For instance, after Bitcoin's halving in 2024, when NVT is below historical averages, it often signals the start of a bull market.
Case: During the 2023 bear market, an institution analyzed the TVL (Total Value Locked) growth rate of the Layer 2 project Arbitrum (ARB) against its token circulation to preemptively position itself, achieving 8x returns in the 2024 bull market.
2. Trend Trading Strategy: Capture turning points in market sentiment
Technical Indicator Portfolio:
Moving Average System: The golden cross/death cross of the 50-day and 200-day moving averages serves as a trend signal, confirmed by MACD for momentum.
Volatility Indicator: ATR (Average True Range) dynamically adjusts stop-loss levels to avoid frequent stop losses in a volatile market.
Quantitative Strategies:
Grid Trading: Set price ranges in a volatile market. For example, if Bitcoin is in the range of $50,000-$60,000, buy every 5% drop and sell every 5% rise, achieving an annualized return of 20%-30%.
Arbitrage Strategy: Utilize price differences between exchanges (e.g., the BTC/USDT price difference between Coinbase and Binance) or perpetual contract funding rates to achieve risk-free profits through high-frequency trading.
3. Event-Driven Strategy: Preemptively position for catalysts
Macroeconomic Events: Fed interest rate hike cycles, Bitcoin ETF approvals, etc., directly impact market liquidity. For example, after the Bitcoin spot ETF was approved in 2024, institutional funds flowed in, pushing the price above $100,000.
Project Events: Mainnet launches, airdrops, token unlocks, etc. For example, before a certain Layer 1 project’s mainnet launch in 2025, analyzing its testnet activity led to early token purchases that increased by 300% post-launch.
2. Risk Management: From single position to full-cycle hedging
1. Position Management Model
Kelly Criterion: Dynamically adjust positions based on win rate and profit-loss ratio. For example, if a strategy has a win rate of 60% and a profit-loss ratio of 2:1, the optimal position is 20%.
Pyramid Averaging Method: After confirming the trend, gradually increase the position in a ratio of 1:2:3 to reduce initial risk. For instance, after Bitcoin breaks $60,000, initially buy 10%, add 20% when it retraces to $58,000, and add another 30% when it breaks $65,000.
2. Application of Hedging Tools
Options Strategy:
Protective Put Options: While holding 100 ETH, buy put options that expire in 1 month with a strike price of $5,000 to hedge against black swan events.
Straddle Option Portfolio: Before significant events (e.g., Federal Reserve meetings), simultaneously buy call and put options to capture the rise in volatility.
Futures Hedging:
Delta Neutral Hedging: Use a combination of spot and futures to make the portfolio value insensitive to price changes. For instance, holding 100 ETH in spot while shorting an equivalent value of ETH futures to hedge against short-term price fluctuations.
3. Black Swan Response Framework
Stress Testing: Simulate extreme scenarios (e.g., Bitcoin drops 40% in a single day) to assess maximum drawdown of the portfolio.
Liquidity Reserve: Maintain at least 20% cash or stablecoins for bottom fishing or replenishing during market panic.
Circuit Breaker Mechanism: Set a maximum daily loss limit (e.g., 5% of total funds); pause trading for 24 hours after triggering.
3. Application of Technical Tools: From manual trading to AI empowerment
1. On-chain Data Analysis
Wallet Monitoring: Use tools like Glassnode and Santiment to track whale wallet movements. For example, in 2025, an organization found multiple addresses constantly withdrawing coins from exchanges to cold wallets, predicting an imbalance in market supply and demand, and preemptively positioning long orders.
Miner Behavior Analysis: Observe miner selling pressure (e.g., the ratio of Bitcoin miner income to expenditure) to determine short-term bottoms.
2. AI Trading Bots
Trend Following Model: Use LSTM neural networks to predict price trends and optimize trading signals with reinforcement learning. A bot developed by a team achieved an annualized return of 15% with a maximum drawdown of only 8% during the 2024 bull market.
High-Frequency Market Making Strategy: Earn bid-ask spreads by providing liquidity, requiring low-latency trading systems (e.g., FPGA hardware acceleration) support.
3. DeFi Protocol Portfolio
Liquidity Mining: Provide liquidity in protocols like Curve and Uniswap to earn trading fees and governance token rewards. For example, in 2025, a user provided liquidity in Balancer's ETH/USDC pool, achieving an annualized return of 40%.
Leveraged Mining: Use lending features of protocols like AAVE and Compound to amplify returns. However, be wary of liquidation risks, such as setting health factor alerts.
4. Practical Cases: A comprehensive analysis of strategies to returns.
Case 1: 2024 Bitcoin Bull Market Strategy
Strategy Selection: Combine value investing and trend trading, holding a primary position in BTC supplemented by high-volatility coins like ETH and SOL.
Risk Management: Use options for hedging, buying put options with a strike price of $80,000 that expire in 3 months, costing 2% of the BTC price.
Returns: BTC rises from $40,000 to $120,000, yielding a 200% return on the primary position; the cost of the options hedge only offsets part of the profit, resulting in an overall portfolio return of 180%.
Case 2: 2025 Arbitrage in a Volatile Market
Strategy Selection: Grid trading + cross-exchange arbitrage.
Operation: When the BTC/USDT price difference between Binance and OKX exceeds 0.5%, buy low and sell high; at the same time, set a grid in the $50,000-$60,000 range, trading every $500.
Returns: Monthly yield reaches 12%, annualized yield 144% (not considering compounding).
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