It’s been a bad year for cryptocurrency, in truth. Ever since Bitcoin peaked at nearly $70,000 in late 2021, investors would have been disappointed to see it take a downward plunge.
At this point, start-of-year speculations that Bitcoin was poised to hit $100,000 before the end of 2022 seem premature, incredulous, even. As Bitcoin continued its freefall, so did several other altcoins.
In recent weeks, Ethereum, Luna, Solana, and a host of other cryptocurrencies have performed badly, with an end to the bearish trend seeming far out of sight. However, despite this failure of the major cryptocurrencies to perform in the first two quarters of the year, many investors have been silently raking in profit.
Where there is a downturn, there is always an opportunity for those in the know who have the wherewithal to take advantage and turn a loss into profit. As a crypto trader, you hold digital assets in your wallet, volatile ones at that.
And if the recent market trends have shown anything, it is that managing your crypto portfolio successfully is very important. If you have the wrong assets in your wallet at the wrong time, you will take huge losses. Just as well, making ill-timed traders may leave you ruing what could have been.
To avoid such sorry circumstances, it’s important to manage your cryptocurrency portfolio the right way. Even in a bullish market, things can still go wrong if your strategies are not sound. In this article, you’ll learn about the best techniques to manage your cryptocurrency portfolio successfully.
However, before then, let’s delve briefly into the shallow waters of crypto portfolios.
What is a cryptocurrency portfolio?
A crypto portfolio is a cumulation or an inventory of your digital crypt assets and investments. It’s usually hosted on online service software and provides a wide range of analytical tools for you to manage your losses and profits.
This feature, known as portfolio tracking, is very important and helps you monitor each coin’s performance in your wallet.
Many portfolio management software online provides pricing updates and live feeds from crypto platforms. They also provide insight into key market ongoings.
A crypto portfolio is akin to a profit and loss record, with the data provided giving insight that is helpful to long-term asset growth.
Like an inventory, a crypto portfolio tracker helps investors to manage their assets judiciously. On the platform, recurring losses can be observed to make predictions and formulate alternate budget strategies to stem the losses.
Just as well, a token that has been performing well gets more attention, and the investor can channel his energies and strategies appropriately.
Tips for managing your crypto portfolio
Successfully managing your cryptocurrency portfolio is no easy task. It’s not rocket science either. A critical analysis of their strategies will reveal certain mutual themes for many investors who’ve lost fortunes investing in crypto.
And it is these mutual themes that any serious investor should avoid if they really want to make a good profit. Below are some ideal strategies to adhere to:
Diversify your portfolio
This is the first and perhaps, the most important rule of investing in cryptocurrency. Not diversifying your portfolio is akin to putting all of your eggs in one basket. The minute something happens to that basket, and all the eggs come crashing down, spilling onto the hard floor.
You certainly don’t want something that unfortunate to happen to your crypto assets!
If the past few months have taught investors anything, it is that no cryptocurrency is impervious to the ravages of the volatile market. Not even Bitcoin! This is evidenced in the downward trend- Bitcoin is about 100% down from its late 2021 highs.
To put it into context, if you had invested $200,000 in Bitcoin in 2021, you’d be left with about half of the amount, a loss of 50%. Awful business, don’t you think?
Diversifying your portfolio is a safeguard against market volatility. And, it protects you from taking in overwhelming losses on the occasion of a market downturn, such as investors are experiencing at the time of writing this article.
Bitcoin will forever remain a great investment. However, you can top it off with a mix of promising and established altcoins. Solana has performed well over the last year. Having a stablecoin asset is also a great idea, as it provides a good buffer in a perpetually volatile market.
Then, you can go for some new, promising projects that you’ve done adequate research on. All in all, you should diversify your portfolio as much as possible.
Use a combination of high, low, and mid-risk investments
This is also a means of diversifying your portfolio. In the preceding section, investors are advised to diversify their portfolios along the lines of token types such as utility, governance, stablecoins, and security tokens.
In this section, investors are urged to diversify their portfolios along the lines of risk. Afterward, they should accord them priority in such a way that there is a good balance.
If your portfolio has a lot of high-risk assets and investments, there’s a strong chance of losing funds and incurring significant losses. Although, if it pays, the rewards are just as massive. However, good balance all-around is the ideal strategy.
Do apt market and token research
Many investors make the costly error of jumping into new projects without apt research. There is no surer way to failure than this. Although the cryptocurrency market is not a precise science, there are some basics to know to steer afoul of equally basic errors.
It’s not enough to base your investment strategy on hearsay and idle speculation. You have to be deliberate about it, and get familiar with the intricacies of blockchain technologies.
A lot of investors buy governance tokens without realizing their true potential. Utility tokens are understood even less. As a serious investor looking to maximize the potential of their crypto portfolio, you should take the time to learn the truth about what you’re investing in.
After all, it’s your money at stake!
Use a crypto portfolio tracker
This cannot be overemphasized. It is literally the best way to monitor your portfolio. And keen monitoring of your assets can be the difference between the right and the wrong investment strategy.
Platforms like CoinStats offer an all-encompassing means of tracking your portfolio. There are charts to monitor the performances of individual tokens and an inbuilt calculator to track your levels of profit and loss. In addition, there are informative and interesting articles on several tokens, crypto exchanges, and more.
The crypto market can seem cutthroat at times, for those who don’t know how it works. Sentimental investments are a sure way to financial ruin, and it is something that all serious investors should avoid every time.
If you’re an investor with FOMO (fear of missing out), there’s every chance that you’ll make many bad decisions, or even purchase a scam coin. Sentimental dealing can also have you sell of potentially valuable assets in the aftermath of price correction.
These are all things you should avoid.
Successfully managing your crypto portfolio is important to making profit. As a serious investor, you must be cautious in your dealings, avoid sentimental trading and educate yourself as much as possible.
The technology of blockchain is still in its infancy. If you want to make profit from now on, you have to do it the right way.