Crypto trading strategies in 2024: How to grow your portfolio?

Is 2024 a significant year for the crypto market?

With the crypto market emerging from a stagnation period, all eyes are on 2024 as the next successful year for the crypto world. The year started with regulatory approval of Bitcoin exchange-traded funds (ETFs) in the United States, and now many anticipate the upcoming Bitcoin Halving as an encouragement for crypto’s further growth. 

To find out more about the impact of Bitcoin ETFs approval, why not read this article: 'Are Bitcoin ETFs the key to the mass adoption of crypto?'.

It is hard to say whether 2024 can be referred to as a new era of crypto trading. However, the crypto market is evolving at its own pace and reaching new levels of maturity. The continued adoption of cryptocurrencies as well as increased institutional participation and technological innovation assumed an important role in the further enhancement of crypto trading.

What do industry experts think of crypto market trends?

Industry experts suggest that the crypto market’s cycles typically align with broader economic events. For example, in 2022, several macroeconomic factors indicated an impending recession; all types of assets, including cryptocurrencies, experienced a downturn in the market. However, they also suggested that as we are moving into 2024, macroeconomic indicators are reversing. 

Many analysts expect a continued rise in institutional investments as well as a shift towards Web3 and the further development of Layer 2 scaling solutions. They all agree that macroeconomic factors and regulatory news could have a broad impact on the crypto ecosystem. 

This question cannot be answered with a high degree of certainty, but after a longer period of stagnation, the cryptocurrency market is beginning to show a bullish trend. Therefore, the market might be more likely to provide traders and investors with opportunities to grow their crypto portfolios.

What is a crypto trading strategy?

A crypto trading strategy can be defined as a set of rules that a user follows to make decisions about purchasing and selling cryptocurrency. Crypto trading strategies can be either simple or complicated. Still, their main role is to tell the trader what triggers the opening of a position or the closing of a position along with the size of the position and other relevant factors. 

Crypto trading strategies are essential tools for crypto traders since they include a structured framework for informed decision-making and risk-management, along with optimising entry and exit points.

Are crypto trading strategies for beginners?

Novices in the crypto world should learn as much as possible about crypto trading strategies. Thorough research and education help investors and traders sort the noise and pick projects with a good foundation and a clear plan. A deep understanding of the value and long-term possibilities in the cryptocurrency market is essential.

Typically, traders have been finding it difficult to trade sometimes on the crypto market due to its volatility. It is recommended for beginners to utilise a crypto trading strategy and therefore, simplify their trading decisions in a well-structured and efficient manner.

How to get started with crypto trading?

Crypto investments and successful trading require the use of a clear strategy to avoid losses in the case of sudden price volatility and market downturns. Portfolio diversification is often a cornerstone of effective trading and investment strategies, particularly due to market volatility.

Keep in mind that you need to use reliable sources of information that provide valuable insights into market trends to make informed trading decisions; market conditions can always change their course in response to global economic events, regulatory updates, and technological innovations.

When it comes to the crypto market, knowledge is power. If you want to become well-versed in the crypto realm, check out our Learn Crypto Academy.

Top crypto trading strategies in 2024

If there is one thing everyone knows about cryptocurrencies, it is that they are volatile. Stories about people gaining profits during an upswing in the crypto market often make headlines as well as stories of people who lose a lot during downswings.

To grow your crypto portfolio through trading strategies while managing risks associated with the crypto market, we have prepared a guide on top crypto trading strategies. Let's check them out.

Hodling

The HODL strategy stems from the misspelling of the word ‘hold’, and the term gained tremendous popularity within the crypto community. The meaning of HODL developed over time to illustrate the users’ state of mind as ‘Hold On for Dear Life’. 

Hodling is a strategy that involves buying and holding onto crypto assets for an extended period, regardless of short-term market fluctuations. By exercising patience, holders can potentially benefit from long-term appreciation as the adoption of cryptocurrencies continues to grow.

While this strategy cannot be deemed a full-fledged trading strategy, it can be a good way to go in a bullish market. It is also suitable for beginners due to its simplicity and potential for long-term gains.

Potential risks

Apart from the crypto market uncertainty when hodlers may have to go through periods of intense price movements, the HODL strategy can cause users to overlook short-term opportunities to buy more assets at a lower price or sell at a peak. 

Dollar-Cost Averaging (DCA)

Dollar-Cost Averaging (DCA) refers to a disciplined investment strategy that includes investing a fixed amount of money in cryptocurrencies at regular intervals, regardless of market dynamics and conditions. 

When investors use this strategy, they purchase more units of a cryptocurrency when prices are low and fewer units when prices are high. By spreading investments over time, this trading strategy aims to smooth out the impact of price fluctuations. 

It can result in a lower average cost per unit and reduce risks associated with buying at a high point in the crypto market. Therefore, Dollar-Cost Averaging is a good way to go for investors who want to avoid the stress of market timing and prefer a hands-off approach.

Potential risks

DCA requires discipline and patience to buy assets at regular intervals and mitigate risks, but it might pose psychological challenges for users. Sometimes market dynamics might suggest that a different approach is better, and it might be psychologically challenging to stick to DCA at these times. 

Similar to the HODL strategy, DCA can result in missed opportunities for broader profits when the price of a crypto asset continues to rise over the holding period.

Day Trading

Day Trading is a short-term strategy that involves buying and selling assets on the same trading day. Day traders aim to profit from price fluctuations that occur within a single trading session to profit on both rising and falling market prices.

The Day Trading strategy requires constant monitoring and decision-making throughout the entire trading session. It includes the potential to gain daily income and quick profits, but it is based entirely on an active involvement in trading.

Potential risks

This trading strategy might be tough for beginners as it comes along with a unique set of risks.  

Apart from the fact that Day Trading can be psychologically challenging and exhausting. It requires in-depth knowledge of the cryptocurrency market and technical analysis. Unlike traditional financial markets, crypto markets operate 24/7 which can quickly lead to burnout. 

The desire to reach financial goals quickly can lead to over-trading or excessively buying and selling assets. Overtrading can amount to increased losses due to market noise and frequent fees. 

Efficient risk management techniques are essential when using this trading strategy. For example, risking a lot of capital on a single trade can amount to big losses as well as not taking into account external factors.

Swing Trading

Swing Trading is a strategy that aims to capture shorter to medium-term price movements within crypto and traditional financial markets. Swing traders typically hold positions for several days or weeks and often utilise technical analysis tools to examine price patterns. 

This trading strategy enables traders to capture potential profits from rising and falling market trends. It requires a more hands-on approach than DCA or Hodling, but it is still less intensive than Day Trading.

Potential risks

If you want to be a successful Swing Trader, you need a deep understanding of market trends, technical analysis, and external factors that affect the current market price. During several days or weeks, sudden changes can happen and impact price movements. 

To learn why technical analysis is important for the crypto space, we suggest reading this article: 'What is Technical Analysis?'.

Arbitrage trading

Arbitrage trading presents a trading strategy that involves exploiting price differences for the same asset across divergent cryptocurrency exchanges. For example, traders buy low on one crypto exchange and sell high on another to make profits. 

Opportunities arise due to inefficiencies in the market which requires quick execution to capitalise on. It requires the monitoring of multiple markets or exchanges simultaneously.

Potential risks

While this trading strategy can be profitable, it carries specific risks such as exchange counterparty risk and slippage. If you want to engage in arbitrage trading efficiently, you need to have access to multiple exchanges, low transaction fees, and set out an effective trading infrastructure.

News-based trading

The News-based strategy or trend following refers to a simple approach that includes identifying and capitalising on current market trends. The main notion of this strategy is to align traders with the current direction of the crypto market.  

Users that employ this strategy seek to gain profits from the price volatility and quick market reactions that commonly follow news releases. Traders who are well-informed all the time about current events and innovations can profit by using this trading strategy.

Potential risks

While this is a simple strategy, traders must ride the momentum and capture the price movements. Traders must also be aware of technical indicators and exit signals such as trend reversals and resistance levels. 

Fundamental analysis

This is a trading strategy that involves examining all of the underlying factors that impact the value of a certain cryptocurrency such as the project’s team and roadmap, as well as the level of adoption and market demand.  

Fundamental analysis aids investors in finding undervalued assets with a good potential for growth and avoiding assets with limited growth potential. 

When investors and traders focus on fundamentals and conduct thorough research, they can create a portfolio of high-quality assets with the potential for growth and value creation.

Potential risks

Fundamental analysis presents an in-depth approach to assessing price trends. Keep in mind that this applies mainly to long-term investing, so short-term trading techniques cannot rely on this method.  

While it is a highly beneficial strategy, it requires traders to demonstrate a substantial understanding of the economy, crypto industry, and market participants as well as practising good due diligence. The whole process can be time-consuming, and traders might lose opportunities when markets are reacting quickly.