One thing about being part of the crypto community is that you get to speak to many people and help them answer questions about investing in a project. It is not always possible to seek investment advice or expert opinions. There is no one size fits all. You may not find the same results as others. It would be best if you had a strategy for investing that would allow you to maintain a balanced portfolio of crypto assets.
If you have ten assets, such as Bitcoin, ETH, DOGE, KCS, or USDT, your portfolio will consist of these assets. Your portfolio’s value is determined by the market prices of the various cryptocurrencies you have. If you are starting to invest in crypto, there is a good chance that you will only have one asset in your portfolio at first. Your portfolio will become more diverse as you invest more in cryptocurrencies.
What is a cryptocurrency portfolio?
Your cryptocurrency portfolio is made up of all coins and tokens that you own. If you have ten assets, such as Bitcoin, ETH DOGE, USDT, and USDT, your portfolio is made up of these assets. Your portfolio’s value is determined by the market prices of all cryptocurrencies you own.
You will likely have one asset in your portfolio if you start to invest in crypto. Your portfolio will become more diverse as you invest more in cryptocurrencies.
The purpose of having a balanced portfolio
Many crypto investors believe that buying crypto means simply holding Bitcoin, hoping it will rise to $1 million per coin. It is an excellent place to begin: purchase Bitcoin. But, walking is the first step to running.
We have seen that investors do not always prefer Bitcoin. Bitcoin’s price rose rapidly in 2021 due to speculation about its adoption by corporate balance sheets. This positive outlook was quickly reversed when the debates over Bitcoin’s electricity usage, and consequent carbon footprint, began to grow.
Balance with Diversification
A balanced portfolio has the first benefit of diversification. You are more susceptible to news than one coin, so it is best to have a balanced portfolio.
Ripple is another example of this dynamic. Recent U.S. government bodies focused on Ripple’s violation of their regulations. The news brought down Ripple’s stock price. The laws surrounding cryptocurrencies remain unrecognized and are being developed. Investing in one cryptocurrency will result in a return on your investment tied to its performance.
Keep your eyes open!
The future may not be as specific as we would like. It is quite the opposite. A diversified portfolio will give you better chances of choosing an asset you think will perform better than Bitcoin in the future. Although it is unlikely that this will happen, you can at least be open to trying other tokens and coins. However, you should always research different cryptocurrencies and look out for projects that solve real-world problems. The Trending Lunc Price can be the one to take a deeper research for your future investment.
Rebalance your crypto portfolio
Being able to diversify your portfolio means you can enjoy all the flexibility to make use of the profits from your underperforming asset to change the balance of your portfolio. For instance, suppose you have three types of investments within your portfolio. Coin A (25 percent), Coin B (25 percent) as well as Coin C (50 percent). Now, you decide to sell a small portion (5 percent per) each of Coin A and B to purchase more of Coin C, which, at present, comprises 60 percent of your overall portfolio. When Coin C’s value increases, Coin C grows, and you can take 10% off Coin C to purchase Coin A and B. This will allow you to balance your crypto portfolio by leveraging the gains you make from your assets that are not performing.
How to efficiently handle your crypto portfolio?
Dollar-Cost Averaging (DCA) is an investment method that lets you split your investments into a predetermined number of regularly scheduled investments to limit the effect of fluctuations on your total investment. Because DCA is a long-term investment strategy and has a lower impact on your investment, less fluctuation and price averaging enables your cryptocurrency portfolio to experience healthy and steady expansion over a longer time.
Use a Crypto Portfolio Tracker
One of the significant benefits of the cryptocurrency economy is the decentralization of many different coins. When you begin to build the portfolio, you might need to work with other exchanges, wallets, and platforms that allow you to benefit from offers. It is often tricky managing your crypto portfolio in these wallets and trying to remember which crypto is in which place. The most popular portfolio trackers for cryptocurrency incorporate various wallets or exchange platforms that allow you to trade your crypto assets.
Be Rational
Cryptocurrency prices can be highly volatile, with wild swings to the downside and upside. In addition, blockchain technology, which cryptocurrency uses to fuel, is a genuinely exciting and relatively new technology. But, be careful not to allow all the hype to make you feel a bit overwhelmed.
Fear of not being able to make it (FOMO) is the main reason why traders fail in managing their portfolios. The emotions usually cause us to buy an asset for a significant price but only to have the market plunge to a considerable level. Additionally, we may become anxious when the price declines by 30% because we’re not sure whether that correction will go to the deeper levels and turn into a 70 percent correction.
Develop a Strategic Exit Strategy
Every successful plan must have exit plans. Research suggests that dopamine levels rise in our brains when our trades win, making us feel satisfied with our choices.
Without an exit plan, the positive feelings will make us want to stay in the position as feedback loops kick in. Gains lead to greater dopamine levels, and increasing dopamine makes us want to hang for the trade. If the market crashes and we believe it bounces back. In the ideal scenario, the cryptocurrency market would then rebound. However, there’s a worst-case scenario: the correction is growing and getting bigger.
Every booming trend eventually comes to an end. Sure, the most potent trends may last longer than people think. However, finally, the trend is saturated and changes.
Conclusion
The management of your crypto portfolio does not necessarily require a lot of effort. But, it is essential to establish a solid plan for the amount you wish to invest and which asset.
Being clear about your thinking process can help you generate profits and stop you from making quick decisions. Diversifying and balancing your portfolio of crypto assets is an excellent strategy to think about for sustainable growth over the long term. You can use cryptocurrency portfolio trackers to track the price, volume, and market cap of your assets in your portfolio. If you don’t want to invest your entire savings at once, you may use dollar-cost Averaging and gradually construct your portfolio. Make sure to conduct your research about the cryptocurrency tokens and coins you wish to purchase.
