There is no denying that cryptocurrencies have become one of the most talked-about investment options of the last decade. It wouldn’t even be an understatement to say that these currencies are changing the world of finance and investment as we know them. For context, a survey by the Pew Research Center found that about 17% of Americans owned cryptocurrencies in 2023, and that number is growing every single day.
Cryptocurrency isn’t just popular in the USA — its adoption has surged globally, due to its potential for extraordinarily high returns. For example, a mere 20-euro Bitcoin investment in 2011 would be worth millions today, outperforming all traditional investment methods.
It’s important to note, however, that although the market can be very profitable, it is also volatile in nature. This means that the prices of cryptocurrencies take huge swings in a downward or upward direction within a very short time, which can lead to significant losses.
For this reason, you need to make sure your cryptocurrency investments are protected. One of the best ways to do this is by having a very balanced portfolio of cryptocurrencies. In this article, we’re going to explore what a crypto portfolio is, what a balanced one looks like, and ways to make sure you invest in cryptocurrency the right way.
Understanding Crypto Portfolios
One major aspect of cryptocurrency investments that needs more attention is the concept of crypto portfolio. No matter your level of experience with cryptocurrency, it is important to fully understand what a crypto portfolio is and how to build a balanced one.
What Is a Crypto Portfolio?
Think of a crypto portfolio as a collection of different kinds of digital assets (in this case, cryptocurrencies) owned and handled by an investor. Its purpose is simple: it helps you, as an investor, to organize, track, and evaluate your investments effectively, showing a clear picture of how your digital assets are performing.
Generally, when creating an investment portfolio, there needs to be a balance of risk and reward. This simply means distributing your investments across various assets to minimize the impact of volatility on your investment, which is very common in the cryptocurrency space. Having a balanced portfolio ensures that losses in one asset can be offset by gains in another, helping you navigate the highly unpredictable space of the cryptocurrency market while maximizing potential returns.
What then is the best way to get started creating a crypto portfolio? The easiest and arguably the best way is to use a great, well-regulated crypto trading platform that is typically used for trading and investing in cryptocurrencies. These platforms usually allow you to track your assets, trades, and investments while also giving you a really good crypto portfolio interface.
Crypto Portfolio for Beginners
Curating a cryptocurrency portfolio as a beginner can be both confusing and nerve-racking, especially with over 11,000 cryptocurrencies currently available. However, following a few set-out guides used by experienced traders and investors which are based on key factors of cryptocurrency investment, can help you simplify the process and set yourself up for success.
Here are the essential principles to implement:
- Simplicity and Ease of Management
When you’re just starting to build your crypto portfolio, you should ensure that your portfolio only consists of a limited number of digital assets. When you do this, you will be able to focus on understanding each asset well without feeling stressed out by the thousands of options out there.
- Emphasis on Stability
As someone just starting out in the cryptocurrency space, you need to focus on lower-volatility cryptocurrencies. Essentially, these are digital assets designed to maintain price stability, often because they are tied to a reserve of assets such as fiat currency (e.g., the US dollar), commodities, or a basket of currencies. They are referred to as stablecoins, for example, USDT. Selecting these assets is a really important step in building a stable investment base.
Additionally, major cryptocurrencies like Bitcoin and Ethereum, while more volatile than stablecoins, are considered more stable than lesser-known altcoins due to their established market presence and adoption.
- Diversification Across Categories
You should also diversify your investment across different digital currency classes when you start investing. You should do this by allocating funds across different categories of cryptocurrencies depending on how much you’re willing to invest, your risk appetite, and your existing assets.
In a volatile market like cryptocurrency, staying informed on global trends and usage patterns is crucial. Dive into comprehensive cryptocurrency stats and facts by country to understand where crypto adoption is booming or struggling. It can provide insights into adjusting your risk levels in different regions.
Note: It is a general investment rule to only invest what you are comfortable losing.
Portfolio Ideas for Beginners
There is no superior template or idea when it comes to building a portfolio. However, successful traders and investors in the crypto market keep one or more of these types of portfolios. A key principle to remember while investing is the importance of maintaining emotional discipline — it is vital to stick to a defined investment strategy regardless of your emotions or impulses in the moment. This can help you make rational decisions, even during periods of market volatility.
Please note that the following is not financial advice — it is a guide meant to help you learn about and understand cryptocurrency investments. We strongly encourage caution when investing in cryptocurrencies, as their values can change rapidly and unpredictably.
A. Conservative Portfolio
If you don’t have a huge risk appetite or are just starting to invest, your portfolio is likely to be conservative.
Allocation:
- 70% Bitcoin (BTC): This is the most established and relatively stable cryptocurrency.
- 20% Ethereum (ETH): It is used majorly for decentralized apps and smart contracts.
- 10% Stablecoins (e.g., USDT, USDC): These are assets to maintain a stable base.
Why it works: This portfolio focuses on established assets with lower risks, making it ideal for really cautious investors.
B. Balanced Portfolio
This type of portfolio has a higher level of risk than a conservative portfolio because of the introduction of Altcoins like Solana, which are known to be quite volatile and very unstable compared to Bitcoin and Ethereum.
Allocation:
- 50% Bitcoin (BTC)
- 25% Ethereum (ETH)
- 15% Altcoins (e.g., Cardano, Solana, or Polkadot)
- 10% Stablecoins
Why it works: People who are willing to take more risk tend to get more reward if it plays out in their favor. So, this allocation takes slightly higher risks for potential growth while maintaining a mix of stable and emerging assets.
C. Growth-Oriented Portfolio
This has the highest level of risk compared to other portfolios.
Allocation:
- 40% Bitcoin (BTC)
- 30% Ethereum (ETH)
- 20% Altcoins (focus on innovative projects)
- 10% High-risk, high-reward tokens (e.g., small-cap cryptocurrencies, meme coins, etc)
Why it works: This portfolio is best suited to crypto enthusiasts just entering the space. This portfolio encourages learning about emerging projects while maintaining core investment stability.
Tips for Managing Your Crypto Portfolio
Now that you have a clue of what your investment portfolio could look like, you might start to wonder how expert crypto investors manage their portfolios really well in the midst of market volatility. Much like the strategies employed by the Best Forex Brokers, who blend cutting-edge analytics with time-tested tactics, seasoned crypto investors mix the right strategies and resources to navigate unpredictable markets. Adopting a similar mindset can help you balance risk and opportunity in your own portfolio. Here are ways you can do the same.
- Start Small
As a beginner getting into the crypto market, it is advisable to start with little investment and prioritize understanding the market. This would allow you to minimize your risk exposure while also giving you time to familiarize yourself with the crypto market without the stress of excessive loss.
- Stay Updated
The cryptocurrency market is highly dynamic, with rapid developments every passing hour, all of which affect the prices and trends of the assets in the cryptocurrency market. Staying updated about market trends, regulatory changes, and news is really important. Using a really good crypto trading tool will help you achieve this. Staying up-to-date with technological advancements will also help you make better investment decisions.
- Use Reputable Exchanges and Wallets
You need to make sure that you’re using well-regulated and reputable tools and resources to handle your portfolio — especially your crypto wallets, which are responsible for storing your assets and exchanges used to trade cryptocurrencies. With these types of tools, you’re quite certain that your assets are protected against theft and hacks.
It’s All About Balance
Crypto portfolios, like any other form of financial portfolio, are highly individualized, and strategies that work for one investor may not necessarily be suitable for another. However, the one key thing that all great portfolios have in common is balance — there isn’t an overreliance on any type of crypto asset. Instead, successful investors spread out their investments among different assets while maintaining emotional discipline, staying informed, and using the right tools and trusted resources.
