2024-05-21 10:39:15 Авторка: Inna Svatenko

How to Build a Crypto Portfolio?

Successful investing in cryptocurrencies requires a competent approach and thorough preparation. We advise you to pay special attention to the creation of a crypto portfolio. If you select promising crypto assets for yourself and correctly distribute the risks, the chances of getting a profit will increase significantly.

In this article, we will find out how to build a crypto portfolio, why it is needed, and what strategies you should use to diversify your assets.

What Is a Crypto Portfolio?

In simple words, a crypto portfolio is a set of assets that an investor owns. It is designed to increase profitability and reduce the riskiness of investments.

Why Create a Crypto Portfolio?

By investing all your money in one type of token, you risk losing part of the amount after the rate drops. A crypto portfoliohelps to level out the risks of losses because, while one cryptocurrency will become cheaper, others can go up. In this case, an investor has a better chance of staying in a win-win situation.

Asset Allocation and Diversification

When creating a beginner’s crypto portfolio, you should understand the following concepts:

Asset allocation is investing in different types of cryptocurrencies (e.g. Bitcoins, altcoins, stablecoins, NFTs, and project tokens).
Diversification is a strategy of allocating funds between assets with different risk levels and in certain proportions.

Types of Cryptocurrency Portfolios

For a better understanding of the features and functions, crypto portfolios are usually divided into several types:

By balance: cryptocurrencies are grouped by risk, distinguishing low-risk, medium-risk, and high-risk assets;
By risk profile: range from conservative (the main part of the portfolio consists of well-known cryptocurrencies) to aggressive (the portfolio includes altcoins and tokens of new projects, which can fluctuate in price but have high growth potential);
By investment period: there are short-term and long-term portfolios, which are characterized by the volatility level and liquidity of tokens.

Main Asset Allocation Strategies

Let’s consider the features of the key strategies used in the formation of crypto portfolios.

Equal allocation strategy

An investor distributes funds evenly between the selected cryptocurrencies.

Pros: simplicity, reducing the risk of concentration.
Cons: possible lost profit if some assets show higher growth.

Proportional allocation strategy

An investor allocates funds in proportion to the market capitalization of cryptocurrencies.

Pros: stability by investing in the largest and most stable cryptocurrencies.
Cons: less participation in potentially high-yielding but lesser-known cryptocurrencies.

Dynamic allocation strategy

The ratio of assets in a portfolio can change based on news, changing market conditions, and asset performance.

Pros: adaptation to market changes.
Cons: the strategy requires active management and regular monitoring.

Strategy based on analyzing prospects

An investor conducts a thorough analysis and selects cryptocurrencies with the highest growth potential, focusing on fundamental and technical indicators.

Pros: high probability of profit.
Cons: the strategy requires in-depth knowledge and constant market monitoring.

Tracking Crypto Portfolio Dynamics

For effective investment management, you should monitor the dynamics of the cryptocurrency portfolio. For this purpose, you can use the following tools:

Cryptocurrency trackers and apps: provide data on prices, trading volumes, and market capitalization of cryptocurrencies.
Exchange accounts: many trading platforms offer built-in portfolio tracking tools that show the current state and historical dynamics of assets.

Creating a Crypto Portfolio Properly

We have prepared tips that will help you create a balanced cryptocurrency portfolio.

Determine your goals and risk level

Before developing a strategy, honestly answer the questions: “Am I more interested in long-term investments or short-term operations?” “How much risk am I willing to take?” “How much money can I allocate to building a crypto portfolio?”

Research cryptocurrencies

Familiarize yourself with the peculiarities of crypto projects and study their technologies, scope of application, and usefulness. Check out the members of the development team and whether these people have had other successful projects.

Prioritize

You should decide what percentage of your capital you can spend on buying each asset. The choice should be in line with your goals and risk tolerance. For example, you might spend 60% on more stablecoins, 30% on altcoins, and 10% on NFT.

Constantly review your portfolio

Analyzing return and risk data periodically allows you to evaluate the effectiveness of your strategy. Create regular reports on portfolio performance and make decisions based on this data.

FAQ

1. What are the benefits of building a cryptocurrency portfolio?

Allocating funds between different assets reduces the risks associated with the volatility of individual cryptocurrencies and increases overall returns.

2. How to choose a coin for investment?

Study the technology, development team, and project goals.
Assess the size and liquidity of the coin’s market.
Check the history of the project and its reputation.
Analyze the coin’s volatility and current exchange rate.
Learn about strategic partnerships and real-world use cases.

Study the activity of the community and the presence of support from investors.

3. Where to create a crypto portfolio?

You can use cryptocurrency trackers, crypto exchanges, special investment platforms, or crypto wallets.

Want to build a cryptocurrency portfolio?
You can buy Bitcoin and other coins at favorable prices on the ObmenAT24 website. We guarantee fast application processing, minimal commissions, and high reserves.