To unlock Nightmare Mode you have to beat the game to unlock this level.
At the storyline where you get the chests in the chieftess' hut at Woodburrow that the individual fills up every day, open the chests and gather the coins. Go to the "Level Select" display and enter a level. As quickly as possible, open the menu and go back to Woodburrow. When you return into town the chests will currently be filled up. Repeat this procedure as many as wanted for unlimited coins. This lead to about 440 overall coins and takes 30/45 seconds to duplicate.