Each investor or trader will have their own ideas on what makes a well-balanced crypto portfolio. But, there are some general rules worth considering:
- Split your portfolio between high, medium, and low-risk investments and give them appropriate weightings. A portfolio containing a large portion of high-risk investments is definitely not balanced. It might have the chance to provide you bigger gains but may also cause huge losses. Your risk profile will determine what’s best for you, but there should be some mix.
- Consider holding some stablecoins to help provide liquidity for your portfolio. Stablecoins are the key to many DeFi platforms and can help you quickly and easily lock in gains or exit a position.
- Rebalance your portfolio if needed. The crypto market is very volatile, and your decisions should change depending on the current situation.
- Allocate new capital strategically to avoid overweighting any one area of your portfolio. If you’ve made big gains recently from one coin, it can be tempting to pump in more money. Don’t let greed interfere, and think about where you can better place the money.
- Do your own research. You really can’t beat this classic piece of advice. You are investing your own money, so don’t rely solely on the advice of others. For tips on spotting potential scams, see 5 Common Cryptocurrency Scams and How to Avoid Them.
- Only invest what you can afford to lose. Your portfolio isn’t correctly balanced if you feel stressed about it. Your positions should not cause you serious consequences in case things go terribly wrong.
Crypto portfolio trackers
A portfolio tracker is a program or service that allows you to trace the movements of your holdings. You can see how your current allocation stacks up with your long-term goals and track your progress. Here are some examples you might want to consider:
CoinMarketCap is a hugely popular price tracker that’s developed its own portfolio feature. The portfolio tracker is available for free on desktop and mobile devices. To use the portfolio tracker, you need to add in your holdings manually as it doesn’t connect to your wallet or exchange. There’s also the option to add in the prices you bought at to track your gains accurately.
CoinGecko is mainly known for its cryptocurrency price tracking, but it has a portfolio option too. It’s free to use and is available on your browser or mobile device. If you’re already a regular CoinGecko user, the tracker is worth a try too.
If you’d like the option to trade when managing your portfolio, Blockfolio is a good option. The company has been around since 2014 and is well known in the crypto space. However, it’s for mobile devices only, so it doesn’t offer the same desktop crypto trading experience.
Delta is a mobile app that allows you to view your crypto portfolio and traditional investments simultaneously. It can connect with 20 exchanges and a variety of wallets, including Binance. There’s both a free and paid version, but you cannot trade within the app.
A lot of the cryptocurrency market is dependent on the health of Bitcoin. But that’s no reason not to balance your portfolio. Varied crypto investments can offset some of the losses that occur with a Bitcoin crash, so it’s always worth having some diversification. Remember, there’s more to balancing your portfolio than holding multiple coins. A bit of strategy will go a long way in creating a suitable portfolio for your risk tolerance.
Source. Binance Academy.