Putting together a crypto portfolio and balancing it is pretty much the same thing as balancing a traditional portfolio. A crypto portfolio also allows you to reduce overall risk according to your investment plan and profile. And what do you need to get started? The answer is simple. Diversify your investments among different cryptocurrencies.
Now, bear in my mind that the extent to which your crypto portfolio is diversified is entirely up to you. There’s no textbook answer to how much an investor should diversify their portfolio as the subject is still on the debate table.
Generally, it is however acceptable for your portfolio to have a level of diversity. Risks can be cut down by consistently rebalancing asset allocation and holding several assets.
Somewhere in this article, we would also talk about portfolio trackers for enabling easy portfolio management.
How to build a well-balanced crypto portfolio
While balancing a portfolio is usually at the discretion of investors, there are some general principles to follow.
1. Split your portfolio
Your portfolio should be split between low, high, and medium risk after which you should give them the necessary weightings. When your portfolio consists only of high-risk investments, it is considered an imbalanced portfolio.
Even though you stand a chance to rake in big profits, you may also be in for some big losses if your investments don’t sail.
2. Consider holding some stable coins
This goes a long way to help you give your portfolio liquidity. When it comes to .anaging Defi platforms, stablecoins are your ace card. With them, you can exit a position or maintain your hold on gains easily.
3. Rebalance your portfolio
This is only in the event of necessity. Due to the volatility of the crypto market, your decisions should only be switched depending on the situation on the ground.
4. Allocate new capital
This should be done tasty to avoid overweighting parts of your portfolio. Often, it’s super easy for investors to get carried away by greed, especially if they’ve recently bagged profits from one coin.
Instead of giving in to the temptation of pumping more money into that coin, Distribute your capital wisely.
5. Do your research
Perhaps of all the tips listed here, this is the most vital. Think about it. What’s the essence of following the other principles when the investments are generally bad ones?
6. Cut your cloth according to your size
In other words, never invest more than you can afford to lose. If you feel stressed or anxious about your portfolio then it isn’t well balanced
Crypto portfolio trackers
What are they? A portfolio tracker is a service or program that lets you follow the movements of your holdings. With a tracker, you can monitor your current allocation and see how they stack up with your goals in the long run. You also get to monitor your progress. One alternative to portfolio trackers is to manually enter your transactions in a spreadsheet.
Here are samples of some really good trackers you can try:
This is a mobile app that lets you see your traditional and crypto investments at once. You can be connected to 20 different exchanges and as many wallets as you own.
Delta does not allow you to trade on it but one extra perk is that there’s both the free and paid version.
This is one of the popular guys out there. CoinMarketCap is available for free on both mobile devices and desktops. In addition, holdings are manually added due to the lack of integration with your exchange or wallet.
To accurately track your profits, this app allows you to add in the prices you bought at.
One thing CoinGecko is known for is its crypto price tracking. Interestingly, it has an option for a portfolio. It’s free and can be accessed on your mobile phone or browser.