The Crypto world is growing and we can say that it will be a big thing in the near future. Many people are investing in popular cryptocurrencies such as Bitcoin, Ethereum, and Cardano. You can read more about these digital currencies before investing.
However, most people don’t focus on managing the portfolio. We know investing in cryptocurrency could be risky, especially when you are doing it for the first time. This is why you need to know how to manage your crypto portfolio.
By having a balanced portfolio, it will be easier. In this article, we will cover the importance of a balanced portfolio and how to manage it. Let’s get started.
What is a Cryptocurrency Portfolio?
Before we dig further, we need to know about the basics of a crypto portfolio. If you are a newbie, make sure you are reading it carefully. In simple words, a cryptocurrency portfolio is something that represents all coins and tokens you own.
For example, if you own different crypto assets, your portfolio will show those particular assets. It depends on the current market price of the cryptocurrency you are owning now. If you are just starting investing, you can’t get a diverse portfolio.
Why Should You Need a Balanced Portfolio
You see, a crypto portfolio is necessary to manage your assets. However, if you are still confused about it, we are here to help you out. In the following, we are sharing why should you need a balanced portfolio.
- Balance With Diversification
One of the best benefits of having a balanced portfolio is it has diversification. If you are holding one asset, it could be difficult to handle ups and downs. For example, if you are holding onto Bitcoin only, you have to face ups and downs. With balanced and diverse portfolio, your investment will be worry-free.
- Diversity to Rebalace
Besides balancing diversity, a diverse portfolio can help you rebalance. Well, when you have been investing for a long time, you can have several assets. With this diversity, you can balance your coins. Moreover, if a coin gets a higher result, the portfolio will split everything between other coins.
- You Can Always Keep Your Eyes Open
Managing a crypto portfolio is a good practice as it can help you keep your eyes open. We don’t know what’s happening in the future. So, when you have a balanced portfolio, it can perform better than a single asset. This is why you need to research before investing in different cryptocurrencies.
Best Ways to Manage a Crypto Portfolio
Now, you know why do you need a balanced portfolio. If you want to manage it properly, you have to implement the following methods. Let’s find out:
1. Dollar-Cost Averaging
Dollar-cost averaging is a unique investment strategy. By implementing this investment strategy, you can divide your investment into a fixed periodic number. It will reduce the risk of volatility of your overall investment.
However, this is a long-term investment strategy. So, don’t apply it if you are looking for quick success. This is why Dollar-cost averaging can give you the most positive and sustainable growth on long-term investment.
2. Use Crypto Portfolio Tracker
A portfolio tracker is another best thing you need to try to manage your crypto profile. If you are using different wallets, it could be hard to keep everything organized. In this case, a tracker can be the best tool.
There are various crypto portfolio trackers available on the internet such as Coin Market Manager, Lucky Money, CoinStats, and Quadency. You can easily trade your assets by using one of these tools.
3. Diversifying Your Portfolio
As we mentioned above, you need to diversify your portfolio to get long-term success. Plus, it also gives a lot of security. For example, if you are investing in one asset, you have to face the ups and downs as well.
On the other hand, if you have a diverse portfolio, the risk of ups and downs can be reduced.
4. Be Rational
As we mentioned above, the crypto world could be very risky at some point. Many people get excited when they start investing. This is the reason for money loss and other issues. So, when you are starting investing in the crypto world, you have to be more rational. Make sure you are researching enough before starting the investment.
5. Be Strategic With Exit Plan
Just like the investment, you need to be strategic with the exit plan as well. Every plan should have a good exit strategy. When people start trading, it’s natural to feel good. That’s why many people always try to stick with the position. A good trader always makes a good exit plan before starting the investment.
Finally, you know how to manage your crypto portfolio. As we mentioned before, the crypto world is getting popular, so it’s not a good idea to invest in only Bitcoin. Make sure you are doing enough research before investing in other cryptocurrencies. For more information, you can even get help from a market expert.
Q: What should be in your crypto portfolio?
Basically, the crypto portfolio represents single assets. However, you can make diversity across coins, tokens, and products. You can allocate as per your requirement.
Q: How much of my portfolio should be in cryptocurrency?
It depends on your knowledge and experience in the crypto world. If you are a beginner, you should invest a little portion. As you gather experience, you can increase the amount.
Q: How do I keep track of my crypto portfolio?
There are various crypto portfolio trackers. You can use coin market manager, Altrady, Lucky Money, Kubera, and Crypto.com. These trackers are good for different purposes, so choose as per your requirements.
Q: How do you grow a crypto portfolio?
Growing a crypto portfolio depends on diversity. The more you can diversify the portfolio the better it will grow. So, don’t invest in one asset like Bitcoin if you are trying to grow your portfolio.