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Five Easy Steps to Managing A Profitable Crypto Portfolio

by Michael EmmanuelMay 17th, 2023

Too Long; Didn't Read

There are numerous coins in the crypto market available, and the profit performance of each varies per time. Several well-performing coins in your armory increases your profit margin. So you should track coin performance in the market, spread your investments across trusted coins, purchase stablecoins, be logical with your investment, and always be ready to let go. CryptoMarketGap is your go-to for tracking crypto behaviour. It provides accurate info on a range of coins and has an easy-to-use interface.

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When news of the FTX collapse broke five months ago, we believed it was the beginning of the end for cryptocurrency. The plummet was inevitable, many thought. The unprecedented crisis hasn’t been without consequences, yet it’s not all gloom for the market. Cryptocurrency continues to show positives, such as the launch of at least four new coins since the turn of the year, and the marginal surge in the value of household cryptos like Bitcoin and Ethereum.

With an estimated 420 million crypto users globally, there isn’t a paucity of new crypto enthusiasts looking to dip their funds in the market. Growing a profitable crypto portfolio can be particularly daunting for these newbies. What coins guarantee short-term and long-term rewards? Should a crypto newbie purchase multiple units of the same coin, or spread the funds across several coins with varying performances?

The easiest way to manage a profitable crypto portfolio is to handle it like a traditional portfolio. Since some coins will outperform others, having several well-performing coins in your armory will prevent losses and guarantee gross profits. For effective management, you should track crypto performances, embrace diversification, and never hesitate to let go of a bad purchase. Balancing your portfolio can be highly rewarding if you know the exact pieces to move every time.

Since some coins will outperform others, having several well-performing coins in your armory will prevent losses and guarantee gross profits

What is a Crypto Portfolio?

A crypto portfolio is a collection of digital coins (cryptocurrencies) owned by an individual. Crypto portfolios often consist of a variety of coins including altcoins, stablecoins, and the largest coins such as Ethereum (ETH) and Bitcoin (BTC). Crypto portfolios are nurtured towards profit through diversification of investments and the purchase of quality coins.

CoinMarketCap reports over 10,000 coins being presently traded in the market. For new investors, this poses a fresh concern - what’s the safest way to make money as a portfolio owner? Purchasing all available coins isn’t only a financial risk, it’s impractical. Some enthusiasts prefer to hold BTC, ETH, or USDT given their long-standing stability. Though this is good advice, committing to one subset of coins makes you vulnerable to the fluctuations of that subset.

Diversifying your portfolio equally increases the odds of picking an outperformer. Last month, BTC surged by 6% to hit a $30k per unit price, the highest since June 2022. Yet, three other coins surpassed the king coin, with RNDR, Render’s native token, reaching a 17% increase. In the future, other coins may outperform BTC in both market value and price growth, hence the wisdom in seeking out coins with strong potential.

How to Manage a Crypto Portfolio?

Suppose you invested in coins A, B, and C at a 30:50:20 rate. As B gains, for instance, your portfolio’s worth increases, altering the investment ratio. To restore balance, you can divert the accrued gain into added units of A and C. That way, you’re compounding your profit margins, rebalancing your portfolio, and boosting your portfolio’s worth.

In managing a crypto portfolio, research precedes purchase. These five tips will point you toward owning a profitable portfolio:

Performance Tracking: An expanding crypto portfolio means that you have to track multiple wallets holding all your cryptocurrencies. Over time, this becomes daunting, especially with the instability of several coins and the rapid changes observed in the market. A crypto price tracker handles the task of monitoring the ups and downs of your different digital assets. It also displays market cap, trading volume, circulating supply, price changes, and other useful data. The accuracy of a data tracker influences your investment choices. Thus, you should select trusted and recommended trackers for your crypto portfolio.
Diversify Your Investments: Crypto portfolios shuffle between concentrated and diversified. As implied, investors with concentrated portfolios fixate on a single well-performing coin. Given the risks, some diversification is encouraged. Sharing your investments across high-risk, medium-risk, and low-risk investments is a great way to maintain balance and minimize losses. If your risk tolerance is above-par, holding more high-risk coins may not be a wrong move.
Purchase Stablecoins: Stablecoins are the go-to for conservative investors. Backed by stable currencies including the US Dollar, they maintain a stable value over extended periods, guaranteeing investors their money’s worth. While they don’t promise mouthwatering returns, they remain unaffected by market dips. Tether (USDT) and the USD Coin (USDC) are two well-known stablecoins held by experienced investors.
Be Logical: Strategically split your funds across well-performing coins, and know when to step back from a given coin. Haste wins nothing, neither does greed or double-mindedness. It’s your money, so regulate your hope with research-backed facts. Stay abreast of changes in trading volume, unit prices, and other data affecting the coins in your portfolio.
Bite Within Means: Cryptocurrencies can be alluring, especially if they experience unprecedented surges over a short period. Learn to identify shitcoins, and don’t throw in more funds than you’re willing to part with. Cryptocurrencies fail for a lot of reasons - security concerns, unsupportive or absent community, etc - so it isn’t strange to find a coin plummeting despite the positive buzz about its future. Just think of LUNA, UST, and SQUID.

Sharing your investments across high-risk, medium-risk, and low-risk investments is a great way to maintain balance and minimize losses.

When building a portfolio, consider starting with small amounts invested in two to five different coins. Observe them for a while, consume white papers and other available information about them, and then come up with a strategy for growing your portfolio.

What Crypto Trackers Can I Use?

Short answer: CoinMarketCap. It’s trusted by industry experts, it’s the most common, and it offers users a portfolio to manually add cryptocurrencies from their wallets. The tracker includes a watchlist that brings updated information on several coins trading in the market.

To choose a tracker, consider:

Usability. The ideal crypto tracker is easy to use. You can navigate the interface without feeling lost, and you don’t have to spend a lot of time looking for buttons or features.
Uniqueness. Every crypto tracker contains specific features that solve users problems. Both CoinMarketCap and CoinGecko, a lesser-known competitor, provide trading volume, market cap, and other data, but CoinMarketCap also displays trending and newly added coins at one glance. Determine what features are convenient for your portfolio before settling for one tracker.
Security. Many trackers are connected directly to your portfolio. Hence, the tracker’s security should be tight. Confirm that there are measures for screening out malicious attacks and that they authenticate transactions using two-factor where necessary.

You can master strategic portfolio management as a new player in the crypto market. It doesn’t have to be complicated. With persistence and keen research, you can get started on building a balanced portfolio and scale up in no time.