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How to Build a Well-Balanced Crypto Portfolio

crypto portfolio

But, by investing in a large number of projects with a sensible amount of capital, this offers the best crypto portfolio allocation strategy in the long run. For portfolio balance, the enhanced risk-reward profile can be countered by larger-cap coins. At the other end of the scale, investors might also wish to allocate funds to newly launched projects with a smaller market capitalization. Stablecoins are crucial as they are pegged to more conventional fiat currency.

This is, however, a high-risk strategy, especially considering that the broader crypto market tends to move in tandem. To reiterate, there is no one-size-fits-all strategy when creating a well-diversified and balanced crypto portfolio. On the contrary, the make-up of the portfolio will differ from one investor to the next, based on their risk profile and long-term goals. Just remember, that each purchase should be in line with the dollar-cost averaging strategy discussed in Step 2.

Building Your Crypto Portfolio Manually

In doing so, each purchase will attract a different cost price, which will be averaged out over time. As of writing, for example, CoinMarketCap notes that Tamadoge carries a market capitalization of under $70 million. Even more interestingly, however, is that Tamadoge is one of the fastest growing crypto assets, even though the broader industry is in a bear market. For instance, since listing on CoinMarketCap, TAMA has increased by more than 315%.

Which combination of two crypto portfolio example should he pick if he wants to maximise his returns? Token A should be in the portfolio given it has the highest expected returns, but should he pick token B or C as the other component? After all, tokens B and C both have the same expected return and volatility. This ratio was developed by Nobel laureate William Sharpe and will give you a quick and handy number to compare different instruments’ risk versus return. In general, the higher the Sharpe ratio, the better the risk-adjusted returns of the investment.

Getting started with your crypto portfolio

Selecting cryptocurrency projects from various regions can expose you to a broader range of innovations within the industry. And because cryptocurrencies are a worldwide phenomenon, diversifying based on where they are popular could lessen the impact of regional price fluctuations. Another way to diversify your crypto or blockchain portfolio is to invest in cryptocurrency projects which are focus on different industries.

These tend to provide more stability than smaller cryptocurrencies, although they are still volatile. As an investor, you want to take advantage of the gains, no matter how small, and minimize your losses as much as possible. With a diverse crypto portfolio, you can cover the loss on one portfolio with the gains earned on another and keep your investment and profits intact. When you diversify your portfolio, you can take advantage of the available cryptocurrencies at different values.

Delta is a smartphone app that lets you examine both your crypto and conventional assets at the same time. It can link to 20 different exchanges as well as a variety of wallets. CoinMarketCap is a well-known price tracker with a built-in portfolio option. Because the portfolio tracker doesn’t have the option to link to your wallet or exchange, you must enter your assets yourself. You can also enter the prices at which you purchased to precisely track how your earnings.

portfolio management tools

Assessing cryptocurrencies based on different use cases requires extensive research on their existing projects, market trends, and market growth potential. Here, we break down the critical factors you must consider in creating a well-diversified portfolio and limiting risk. XRP A well-diversified crypto portfolio contains multiple types of crypto with different market use cases in various industries and countries. Asset-based tokens, trading tokens instead of the assets, where assets can be company shares, real estate, etc. NFTs produce one-of-a-kind tokens that may be used to demonstrate ownership and transfer rights to digital assets. ​​A well-balanced portfolio will comprise a variety of coins and investments to decrease overall risk.

Common ways to diversify by market capitalizations, geographic location, and different types of cryptocurrencies with different use cases. Having a portfolio of 3–9 cryptocurrencies will optimize your risk-adjusted return. Moreover, you’ll get to own some of the coins that haven’t yet had quite the run that bitcoin and ether have.

For example, you may hold 40% Bitcoin, 30% Ethereum, 5% Cardano, 2.5% Sushi, etc. For example, the former powerhouse Terra network uses a governance token, Luna. In 2021, Luna holders voted on burning tens of millions of luna tokens and minting millions of new TerraUSD stablecoins. The dramatic decline in Bitcoin’s value in May is a clear example of the dangers of crypto investment. Cryptocurrency is a very risky investment, prone to large fluctuations in short periods of time.

Rebalance your portfolio carefully.

Do not forget that keeping multiple coins is only one aspect of maintaining portfolio balance. A little amount of forethought will go a long way toward building a portfolio that is appropriate for your risk tolerance. It’s difficult to find new coins these days that focus solely on payments.

  • Active portfolio management also tends to be riskier than a long-term passive investment approach.
  • However, keeping crypto that is well known and has plenty of liquidity is by far the safest way to go.
  • You may invest in stablecoins, which provide greater interest rates owing to market demand, in addition to more traditional cryptocurrencies.
  • The tokens chosen for the portfolio are all individually handpicked based on the current narrative and potential to grow.
  • Ethereum has built in the idea of “smart contracts,” which allows for so much of the innovation that’s coming over the next 10 years using blockchain technology.

We understand how complex and difficult this can look, so we want to grow our blog as a database where you’ll be able to find everything you need. You’ve probably heard of Bitcoin and Ethereum if you’ve been reading a bit about cryptocurrencies. This information base, on the other hand, merely scrapes the surface of what may be as complicated as you want it to be. For example, an Uber token may be used as a payment method in an Uber vehicle.


Micro- – Ethereum’s future potential means even small investments can grow significantly over time. Micro-investing – As bitcoin emerges as a store of wealth, many investors use it to grow their wealth over time. The Traditional Investor – Value investing gives traditional investors a way to value cryptocurrency. Intermediate Intermediate Series 4 Strategies for Surviving a Crypto Bear Market Investing in bear markets? In this article, we’ll walk you through four strategies and mindsets that can help keep you safe.Intermediate Intermediate Series What Is the Ethereum Virtual Machine ? Key Crypto Infrastructure The Ethereum Virtual Machine helps developers build DeFi applications, scale web3, and launch NFT projects on the Ethereum Blockchain.

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Both crypto portfolio example are the leading DeFi protocol in their own ecosystem with strong support from the community. Both projects are well-positioned in the ecosystem and will no doubt grow as the ecosystem expand. Chain Debrief aims to inform, educate, and connect the global investment community through our crypto guides, news, analyses, and opinion pieces. Enjoy the highest earning rates in the market with top performing trading strategies. In this example, the investor opts for eight small-caps at $250 each.

How do I make a good crypto portfolio?

  1. Diversifying Your Portfolio.
  2. Choose long-term coins with a sound vision and fundamentals.
  3. Trading and Investing Strategies.
  4. Utilize Your Circle of Friends and Family.
  5. Rebalance your portfolio.

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