Here are 6 tips on how to build a well-balanced crypto portfolio:
1. Split your portfolio between high, medium, and low-risk investments and give them appropriate weightings – A portfolio containing a large portion of high-risk investments is definitely not balanced. It might have the chance to provide you bigger gains but may also cause huge losses. Your risk profile will determine what’s best for you, but there should be some mix
2. Consider holding some stablecoins to help provide liquidity for your portfolio – Stablecoins are the key to many DeFi platforms and can help you quickly and easily lock in gains or exit a position
3. Rebalance your portfolio if needed – The crypto market is very volatile, and your decisions should change depending on the current situation.
4. Allocate new capital strategically to avoid overweighting any one area of your portfolio – If you’ve made big gains recently from one coin, it can be tempting to pump in more money. Don’t let greed interfere, and instead, think about where you can better place the money
5. Do your own research – You really can’t beat this classic piece of advice. You are investing your own money, so don’t rely solely on the advice of others
6. Only invest what you can afford to lose – Your portfolio isn’t correctly balanced if you feel stressed about it. Your positions should not cause you serious consequences in case things go terribly wrong
A lot of the cryptocurrency market is dependent on the health of Bitcoin. But that’s no reason not to balance your portfolio.
Varied crypto investments can offset some of the losses that occur with a bitcoin prie drawdown, so it’s always worth having some diversification.
Remember, there’s more to balancing your portfolio than holding multiple coins. A bit of strategy will go a long way in creating a suitable portfolio for your risk tolerance.