How to Gain Alpha in the Crypto Market? Excess Return Strategies that Outperform Market Fluctuations

In the crypto world, “Alpha” is becoming the core goal for investors: it represents excess returns beyond market benchmarks (such as Bitcoin or Ethereum’s overall performance). Unlike “Beta” returns that fluctuate with the market, true Alpha comes from unique information, strategies, or execution advantages that enable investors to generate independent profits regardless of market conditions.

According to Gate market data, as of January 28, 2026, Bitcoin is priced at $89,199.2, Ethereum at $3,010.66, with market caps reaching an astonishing $1.78T and $353.69B respectively, accounting for nearly 70% of the market share.

Alpha and Beta: The Dual Return Dimensions of the Crypto Market

In traditional finance, Alpha measures the excess return of a portfolio over its benchmark index, while Beta reflects the correlation between the portfolio and overall market volatility. This concept applies equally in crypto markets but manifests in more extreme forms.

Beta returns in the market are relatively easy to obtain; when Bitcoin rises 0.87% in 24 hours and Ethereum increases by 2.55%, investors holding a basket of mainstream cryptocurrencies naturally gain corresponding returns. But Alpha is different—it requires investors to create returns beyond the market through active strategies, informational advantages, or structural opportunities. For example, if the entire crypto market rises 50%, but your portfolio increases 80%, then the extra 30% is your Alpha.

The crypto market’s youth, decentralization, and relative inefficiency provide fertile ground for finding Alpha. Compared to traditional markets, there are more opportunities for information asymmetry and mispricing, especially in emerging projects, cross-market arbitrage, and early ecosystem participation.

Diversified Alpha Generation Strategies

Alpha is not a single method but a collection of strategies. True Alpha hunters need to adapt strategies flexibly based on market conditions.

Cross-market arbitrage is a classic method that exploits price differences between centralized exchanges and decentralized exchanges. For example, when the same asset shows a price gap between Gate and a DEX, automated traders can buy low on one platform and sell high on another, earning riskless profits.

Leverage yield farming represents an Alpha opportunity in DeFi. Take Stella (formerly Alpha Finance Lab) as an example; it allows users to perform zero-cost leveraged yield farming through an innovative PAYE model. Borrowers only pay fees when the strategy is profitable, contrasting sharply with traditional DeFi lending models. This structural innovation itself is a source of Alpha.

Early ecosystem participation is another important Alpha source. By actively engaging in new public chains, Layer2 solutions, or protocol testnets, investors can accumulate verifiable on-chain records, laying the foundation for future airdrops or incentives.

Event-driven strategies revolve around specific events such as protocol upgrades, token unlocks, or governance votes. By researching these events’ market impacts in advance, investors can position themselves before information is fully disseminated.

Modern Tools for Alpha

Today’s Alpha hunters have access to tools unimaginable to their predecessors, greatly lowering the barriers to discovering market inefficiencies. On-chain analysis platforms like Nansen’s Candlestick Inspector allow investors to track the movements of “smart money” wallets. Observing these wallets’ actions before major market events can provide valuable market sentiment indicators.

Tools like Bubblemaps V2 focus on risk prevention; they analyze holdings and fund flows before buying any new tokens, helping investors avoid “rug pulls.” In DeFi, this risk management capability itself is a form of Alpha.

DeFiLlama’s funding project panel enables investors to gain early insights into emerging narratives. By filtering projects with large seed rounds that align with new narratives, investors can position themselves before broad market attention. Ethos Network’s ranking provides a tool to identify credible voices. In the overload of information on crypto social media, recognizing which voices are “not worth paying attention to” and which are valuable is equally important.

Case Study: Alpha Opportunities in the Stella (ALPHA) Ecosystem

As a DeFi platform focused on leverage strategies and cross-chain interoperability, the Stella ecosystem itself exemplifies Alpha generation. Its native token ALPHA is used not only for governance and staking but also allows holders to share protocol revenue, creating a passive income stream for long-term holders.

Stella’s core innovation lies in its on-demand revenue payment model, distinguishing it from traditional DeFi lending. Borrowers only pay fees when profitable, aligning interests tightly and promoting sustainable ecosystem growth. From an tokenomics perspective, ALPHA’s maximum supply is fixed at 1 billion tokens, with about 846 million currently in circulation. This fixed supply, combined with the protocol’s utility, underpins its value.

Risk Management and the Sustainability of Alpha

True Alpha is not the result of a single lucky bet but a repeatable, verifiable systematic process. Distinguishing Alpha from mere luck requires rigorous performance measurement and review. Establishing clear benchmarks is crucial. For spot portfolios, Bitcoin or market-cap-weighted indices are appropriate references; for sector-specific strategies, relevant sector indices should be used.

Regularly recording excess returns is key to evaluating strategy effectiveness. Investors should calculate “portfolio return − benchmark return − trading costs” weekly or monthly, and observe whether excess returns remain positive over multiple periods.

Risk control cannot be overlooked. Investors should monitor maximum drawdowns and volatility; if excess returns stem from high volatility or chance events, their sustainability is questionable.

The price history of Stella’s native token ALPHA exemplifies the high volatility typical of crypto markets, offering valuable lessons in risk management. The token hit an all-time high of $2.93 in February 2021 but then experienced a significant correction.

As of January 28, 2026, according to Gate data, ALPHA’s price is $0.005816, with a 24-hour trading volume of $13.59K and a market cap of $5.6M. Although far below its all-time high, recent data shows some activity: a +1.17% change in the past 24 hours, +1.98% over the past 7 days. Looking at longer timeframes, volatility is more apparent: +17.33% over the past 30 days, but -90.72% over the past year. This extreme volatility vividly reminds investors that high returns often come with high risks.

For professional market participants, establishing a systematic risk management framework is essential. Maintaining detailed event calendars and risk lists is an effective approach—tracking key protocol upgrades, token unlock schedules (ALPHA’s total supply is 1B, with 961M in circulation), and governance voting dates helps plan positions and develop contingency strategies.

Price Analysis and Ecosystem Outlook

Based on the latest market data from Gate, we can conduct a neutral analysis of Stella and its ALPHA token.

Currently, ALPHA’s market sentiment is marked as “bullish,” with a market cap to fully diluted market cap ratio of 96.1%, indicating that token issuance is nearing completion and supply-side inflation pressure is low. However, the $13.59K 24-hour trading volume is relatively low compared to its market cap, reflecting limited market liquidity.

From an ecosystem development perspective, Stella (formerly Alpha Finance Lab) as a platform focused on DeFi leverage products, its value is closely tied to ecosystem adoption. Despite the low token price, the project team continues product iterations and cross-chain expansion (e.g., deploying on networks like Arbitrum) to rebuild market attention and utility. This fundamental development is key to long-term value support.

From a broader market perspective, Alpha (excess returns) opportunities in crypto are closely linked to the industry’s infrastructure development cycle. Currently, fields like Layer2 scaling solutions, modular blockchain stacks, on-chain derivatives, and real-world asset (RWA) tokenization are emerging as frontier tracks for new Alpha, driven by innovation and growth potential.

Additionally, ongoing evolution in global regulation will profoundly influence sources of Alpha. As major markets clarify regulatory frameworks, assets and projects with clear compliance and robust architecture may attract incremental institutional capital, reshaping valuation logic and price discovery mechanisms.

Summary: Seeking Sustainable Alpha in Systematic Strategies

Finding and capturing Alpha in the crypto market is a core capability that distinguishes professional investors from passive holders. This process should be based on systematic research, rigorous strategies, and ongoing risk management, rather than relying on luck.

As Bitcoin currently dominates with a market cap of $1.78T, even tiny percentage fluctuations can generate substantial absolute gains (Beta returns). However, those who can traverse cycles and sustain wealth creation are often investors who discover structural opportunities through deep insights, exploit market inefficiencies short-term, or participate early in emerging narratives.

Whether through cross-market arbitrage, active early ecosystem participation, or constructing hedging strategies with derivatives, the essence is transforming cognitive advantages into sustainable excess returns. Platforms like Gate, offering diverse trading pairs, professional tools, and deep liquidity, are vital infrastructure for executing these strategies efficiently.

Ultimately, when market participants ask where Alpha is, the answer may lie in underappreciated protocol upgrades, assets overly mispriced by market sentiment, or emerging projects just completing key integrations but not yet widely noticed. Finding them requires focus and professionalism beyond market noise.