How to Build an All-Weather Cryptocurrency Portfolio in Bull and Bear Markets?

Author: Taiki Maeda

Compiled by: Deep Tide TechFlow

As the market enters what many call the "end of the cycle," I believe there are some undeniable risks that are on the rise. At such stages, it is particularly important to think comprehensively about your portfolio and build an "all-weather portfolio" that can withstand various market conditions. This portfolio not only protects you from market downturns but also captures the gains from asymmetric opportunities.

As a humble yield farmer, I have developed an investment framework that combines two of the best strategies and iterates based on the preferences of the readers.

This is the "Humble Farmer Portfolio" framework (including the allocation ratios of various assets):

• Stablecoin yield farming (30%-60%)

• Holding quality cryptocurrency spot (30%-60%)

• Yield farming airdrops from new perpetual contract decentralized exchanges (Perp DEX) (1%-10%)

Stablecoin Yield Farming (30%-60%)

Stablecoin yields typically compress during bear markets but perform exceptionally well in bull markets. A savvy yield farmer once told me, "If you are yield farming in DeFi, you are actually indirectly bullish on altcoins because good yields require altcoins to be in a bull market." As a stablecoin yield farmer, the likelihood of losses is very low (as long as the project doesn't run away), because you are selling tokens to those who blindly buy coins.

By holding a healthy proportion of stablecoins, you can achieve yields of over 15% in bull markets while improving your "sleep-adjusted returns" (i.e., reducing anxiety caused by market volatility). The main advantage of holding stablecoins is that if the market enters a bear phase, we can buy cryptocurrencies at low prices.

Holding Quality Cryptocurrency Spot (30%-60%)

Many have proposed the "end of the cycle theory," suggesting that strong assets like Bitcoin can continue to rise like the stock market. The crypto space has also seen the emergence of truly compound growth assets, such as Binance Coin (BNB), which are more suitable for long-term holding rather than frequent trading. However, we must also accept the fact that if "this time is not different," all these coins could drop at least 50% in a bear market.

Therefore, as humble yield farmers, we must set aside our egos and choose those assets that we believe can outperform the market in the long run while accepting the potential for drawdowns. This requires proper due diligence and research, forming a conviction-based investment logic, which is what you excel at.

Yield Farming Airdrops from New Perpetual Contract Decentralized Exchanges (Perp DEX) (1%-10%)

Finding an edge in liquidity markets becomes increasingly difficult over time. In the past few years, I have realized that our advantage as retail users lies in our ability to try new things and earn rewards through airdrops. How many people have achieved financial freedom through yield farming Hyperliquid airdrops compared to those battling it out in altcoins?

I once thought Hyperliquid was the last large-scale airdrop for perpetual contract decentralized exchanges. But now, I believe Lighter will also perform well. After Lighter, people might say it is the last big airdrop in the perpetual contract space, and new projects are not worth yield farming.

I challenge this viewpoint because even now, we still have many first and second-tier blockchain projects with high market caps but no users. If perpetual contracts are the killer application in the crypto space, why can't there be multiple valuable perpetual contract decentralized exchange tokens? Is it possible to see 1-2 large-scale airdrops each year? This possibility may be higher than you think.

So the question arises, how should we yield farm? Where should we yield farm?

Yield Farming Strategy

"Just become a profitable perpetual contract trader." Yes, but unfortunately, most people lose money in perpetual contract trading. Therefore, it is best to narrow our risk exposure and develop a comprehensive strategy that benefits the entire portfolio.

I started trying a strategy and achieved varying degrees of success, which is to short high market cap tokens with very small positions while earning positive funding fees.

The goal of this strategy is not to mimic "The Big Short" and make huge profits by shorting tokens, but to accumulate airdrop points while supplementing other parts of the portfolio. Perpetual contract decentralized exchanges typically reward open interest rather than trading volume:

If we have already gained long exposure through spot holdings, the entire portfolio may benefit from opening some short positions, especially since the funding fees for most perpetual contract tokens are positive (i.e., shorting can yield profits). Personally, I would open small short positions on tokens that I don't mind holding a reverse investment for a few months. If these tokens rise by 50%, I can further increase the reverse investment position.

If the market rises, the money you earn from your spot holdings will outweigh the losses from shorting. If the market continues to rise, the airdrops you yield farmed may be worth a lot in the future. If the market enters a bear phase, at least you will be compensated for shorting declining assets (even though the airdrops may be worth less).

People often joke about the existence of "air projects" worth billions of dollars in the crypto space… why not make money by shorting them? Based on my experience, I have had some success shorting high market cap tokens and increasing my positions when prices rise. For example, if you have a $100,000 portfolio, you could start with a $500 short at 1x leverage and gradually increase as prices rise.

This may not be the most thrilling operation… until the airdrop tokens enter your wallet. For instance, I did a small amount of trading using Hyperliquid's closed beta in April 2023, deposited HLP, and received over $100,000 in airdrop rewards. I also made a few bad trades on Lighter between March and April 2025 but accumulated a lot of points (and luckily referred some big traders).

Every time I yield farm a new perpetual contract decentralized exchange, I regret not starting earlier. Acting early really can yield benefits, and there may be some signal hidden in that.

Summary and Risks

Obvious risks include shorting a token that eventually rises 100 times and yield farming a perpetual contract decentralized exchange that ultimately fails to launch (TGE). However, you can mitigate these risks by adjusting position sizes and choosing the right tokens/platforms. I am not saying to never go long on tokens, but I believe the "small-scale shorting" strategy is a default option worth adopting.

I do not want to recommend specific short tokens or yield farming perpetual contract decentralized exchanges, but @hansolar21 has built a nice dashboard where you can check. Additionally, I encourage everyone to communicate with the team and join the Discord group to learn which projects are worth yield farming and which have no hope (DOA): perpetualpulse.xyz.

If you yield farm projects like Lighter, your points will definitely have value, but the difficulty of yield farming will be higher. A new perpetual contract decentralized exchange with fewer users will be easier to yield farm points, but there is also the risk that its tokens may be worthless. It is always a trade-off! Perhaps the best strategy is to use multiple perpetual contract decentralized exchanges simultaneously to better understand the space.

Good luck, humble yield farmers!

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