The material presented here reflects the author’s viewpoints and investigation, and should not be considered financial guidance. The details provided are broad in scope and might not cater to the particular requirements of any individual or organization. This content should not be used as a basis for making professional or financial decisions.
Do you want to build a rich, profitable crypto portfolio? Follow these beginner-friendly strategies for making huge profits and passive income, even in a bear market. We’ll go beyond just Bitcoin and Ethereum and cover the essential topics of diversification and risk management. This step-by-step guide to cryptocurrency portfolio management has everything you need to succeed. Don’t worry, you can do it!
Table of Contents
- What is a Cryptocurrency Portfolio?
- How to Build a Profitable Crypto Portfolio?
- 1. Risk Management of Crypto Portfolio
- 2. Number of coins in your portfolio?
- 3. What type of coins should I invest in?
- 4. Diversify Your Crypto Portfolio
- 5. Best Ways to Diversify a Crypto Portfolio
- Top 10 Important Sectors of Crypto
- 6. Earn Passive Income From Your Portfolio
- 7. Best High reward coins
- How much of your portfolio should be crypto?
What is a Cryptocurrency Portfolio?
A crypto portfolio is a cryptocurrency collection owned by traders and investors. Portfolios typically include a variety of assets, including altcoins and crypto financial instruments. It is very similar to a traditional investment portfolio, except that it is tied to one asset class. You can manually track your assets using a spreadsheet or use specialized tools and software to calculate your assets and returns. A good portfolio tracker can help. Trackers are essential for intraday traders and other short-term traders, but they are also valuable to long-term investors and holders.
How to Build a Profitable Crypto Portfolio?
There are a few simple steps you should follow if you want to build a highly profitable cryptocurrency portfolio. These steps should be followed by all investors, whether they are in the stock market or in real estate.
1. Risk Management of Crypto Portfolio
Risk management is the most important part if you want to build a crypto portfolio successfully. because some people don’t want to take high risks, and some people have a high risk-taking ability. Every person’s situation is different, so how do you figure it out? Don’t worry. You can manage your risk in 3 simple steps.
First Step: You must first choose whether you want to take a low, medium, or high risk.
Second Step: I will advise you to diversify your crypto portfolio into 3 parts.
- In the first part of your portfolio, you should hold strong coins that have low risk.
- The second part of your portfolio is for medium-risk/reward coins.
- In the third part, you can hold high-risk/reward coins that have good fundamentals and a future.
Third Step: In this step, you must follow this crypto portfolio allocation.
- Allocate 50% of your portfolio to strong fundamental coins.
- 30% of your portfolio should be in medium-risk, medium-reward coins.
- 10% of your portfolio is in high-risk, high-reward coins.
- 10% of your portfolio should be in stable coins (which is important for buying the dip on market crashes).
♦ Congratulations You Completed Step 1
2. Number of coins in your portfolio?
How many coins should I hold in my crypto portfolio?
You should hold coins according to the size of your portfolio, whether it is large or tiny. Here is the greatest technique for determining how many coins to hold while building a profitable crypto portfolio.
- Tiny investor: If your portfolio size is less than 3K, you can invest in 3–4 coins.
- Small investor: If your portfolio size is less than 10K, you can invest in 5-6 coins.
- Medium Investor: If your portfolio size is more than 20K, you can invest in 8-9 coins.
- Big investor: If your portfolio size is greater than 50K, you can invest in 10-12 coins.
Important Tips :
- I have seen many small investors have 25-30 coins in their portfolios. Don’t make this mistake. Otherwise, you can’t beat even Bitcoin returns.
- A consolidated Portfolio will give you higher returns than diversifying. Diversifying your portfolio will protect you.
- Buy a few fundamental coins on the dip, hold them, and take profits at the right time.
♦ Congratulations You Completed Step 2
3. What type of coins should I invest in?
What type of cryptocurrency should I invest in?
In terms of risk potential, there are different types of cryptocurrencies on the market that we must identify. I believe you should include Bitcoin and Ethereum in your core crypto portfolio. Let’s have a look at the different types of cryptocurrencies to invest in according to their risk factors. I have divided it into 3 parts.
- Low-risk Cryptocurrency: Bitcoin, Ethereum (which is a strong fundamental coin).
- Medium-risk Cryptocurrency: Top 20 coins by market cap (large-cap altcoins).
- High-risk Cryptocurrency: Under 100-350 ranked by the market cap.
Must Read – How to do Cryptocurrency Fundamental Analysis
I don’t invest in coins that are below rank 350 until I believe in coin fundamentals. Also, I don’t invest in meme coins. I will not recommend you invest in meme coins because it is not a worthwhile investment in the long term.
You can check Cryptocurrency rank by market cap at Coinmarketcap.com.
♦ Congratulations You Completed Step 3
4. Diversify Your Crypto Portfolio
If you are an investor, then you should have a diversified portfolio because it will reduce the risk of investment. Diversifying your portfolio is the most important part of investing in any market. but it doesn’t give you any advantages when the overall market is crashing.
Remember, crypto is always risky, so adding different projects to our portfolio will give us advantages to minimize our risk when we build a balanced portfolio. Don’t invest all your money in a single coin or project.
♦ Congratulations You Completed Step 4
5. Best Ways to Diversify a Crypto Portfolio
The best way to diversify your crypto portfolio is by allocating it to different sectors. This is called “advanced diversified.” We need to look beyond Bitcoin and Ethereum to get high returns. We need to consider various sectors. Here are the
Top 10 Important Sectors of Crypto
1. Layer 1 Blockchain (L1)
Bitcoin and Ethereum are solid fundamental coins to have in your portfolio. There are some fundamental L1 coins based on your risk profile that you can add to your portfolio.
- Low-Risk coins: Bitcoin, Ethereum, BNB
- Medium risk/Reward coin-Cardano, Polkadot, Solana
- High-risk/Reward coins: EGLD, KSM, Near
2. Layer 2 solution (L2)
We face scalability issues when many people use core L1 like ETH. So the price of the gas fee for ETH will increase, and transaction speed will reduce. That’s why we need L2 solutions. There are some solid L2 coins we can add to our portfolio.
- Low-Risk coin-Matic, SYS
- High-risk/Reward coin-Metis, Dusk, CTSI
Must Read: Why Metis is better than Polygon Matic
3. Exchanges (DEX and CEX’S)
There are Some Centralize and decentralized Exchanges coins we should add to our portfolio based on our risk profile.
- Centralized Exchange Coins: BNB, FTT, CRO
- Decentralized Exchanges Coins: Cake, Boo, INJ
Everyone is Taking about Web3. Even Elon Musk is talking about web3. People and I also think web3 is the future of the Internet. We should add web3 based project to our Portfolio.
- Low risk/Reward Coin-Polkadot, ChainLink
- High-risk/reward coin-Ocean, Rad, PRQ, Bat
As we know, we can pay globally in crypto without delay and restriction. Crypto Payments have the potential to create a finite and global economy. We should have exposure to payment-based projects.
- medium risk/high reward coin — Coti, UTK
Everyone is familiar with this subject. It recently exploded after Facebook revealed its intention to enter the Metaverse. There are some metaverse gaming projects that we should be aware of.
- Medium risk/reward coins: Mana, Sand, AXS, Illuvium
- High-risk/reward coin-Pyr, VRA, Star Atlas
It has enormous potential to solve the ownership issue. While crypto is hazardous, NFT is very risky. The majority of NFT ventures will fail. We must use extreme caution while investing in NFT. No doubt, it can give you higher returns. Play to earn NFT projects we can consider adding to our portfolio.
build a crypto portfolio, crypto portfolio management, portfolio allocation, crypto investing strategies, diversify cryptocurrency portfolio
The future will be many chains, and interoperability between chains will be crucial. We already see that with many projects and bridges to come. It will be a hot sector to look at.
- Medium risk-reward coins – Polkadot, Atom
- High-risk-reward coins – Rune, Multi
9. Privacy coin (optional)
These are the coins that can’t be tracked. It is known for private transactions. Personally, I don’t invest in privacy coins, but you can invest according to your research and risk profile. This is something you have to know about it.
You can’t predict a crash in the market. That way we should carry 10% of our portfolio in stablecoins. So we can buy coins during the market crash.
♦ Congratulations You Completed Step 5
6. Earn Passive Income From Your Portfolio
Do you want to earn passive income from your cryptocurrency portfolio? However, the market always has bulls and bears time, but the important thing is to make sure your portfolio is constantly growing.
Staking and yield farming is a way that you can earn passive income from your portfolio. It can be very helpful in protecting your portfolio during bear markets, it has some risks and you must understand them well.
♦ Congratulations You Completed Step 6
7. Best High reward coins
9 best Coins to buy now for higher returns (NFA)
There are some must-have good fundamental coins for the long term and higher returns. Do your research on these projects before investing.
1) POLKADOT 2) EGLD 3) RUNE 4) OCEAN 5) COTI 6) Illuvium 7) METIS 8) SYS 9) BOO
♦ Congratulations You Completed Step 7
How much of your portfolio should be crypto?
We should consider Cryptocurrencies as a high-risk asset class in your portfolio, and many experts say they should not exceed 5%-10% of your portfolio. The value of Bitcoin and all cryptocurrencies can fluctuate significantly over the course of a day or even an hour, so you should familiarize yourself with the volatility and uncertainty that come with it.
Congratulations on becoming part of the top 10% of cryptocurrency investors! By following the steps outlined in this guide, you can protect your portfolio from losses. These insider tips are not often shared, so be sure to read and implement them as you build your portfolio. Keep these strategies in mind and you’ll be well on your way to success in the world of cryptocurrency.
If you don’t know how to research and invest in the best crypto project? then you must read the article below.
Must Read: How to do Fundamental Analysis on Crypto Project.