{"id":4479,"date":"2022-05-18T10:14:23","date_gmt":"2022-05-18T03:14:23","guid":{"rendered":"https:\/\/test.wikibinance.com\/?p=1870"},"modified":"2022-12-13T12:09:33","modified_gmt":"2022-12-13T05:09:33","slug":"crypto-portfolio","status":"publish","type":"post","link":"https:\/\/wikibinance.com\/en\/knowledge\/crypto-portfolio.html","title":{"rendered":"What is a crypto portfolio? Detailed guide to build a crypto portfolio"},"content":{"rendered":"

Whether it’s traditional financial or cryptocurrency investments, building a portfolio is important. This allows investors to minimize overall risk according to their investment profiles and strategies. Simply put, balancing a crypto portfolio means diversifying investments between different currencies.<\/span><\/p>\n

Depending on the potential of the investor, the level of diversification of each person is different. However, there is no doubt that it is beneficial in the long run thanks to reducing the risk of various cryptocurrency investment (including stablecoins). The rebalancing of the crypto portfolio must take <\/span>place regularly<\/b>.<\/span><\/p>\n

Entering the cryptocurrency market is not difficult, but this requires investors to have a good knowledge. To make an informed decision, it is impossible to ignore the distribution of assets and a well-balanced crypto portfolio.<\/span><\/p>\n

\"Building
Building a crypto portfolio is important<\/figcaption><\/figure>\n

What is a crypto portfolio?<\/b><\/h2>\n

A crypto portfolio is a set of cryptocurrencies owned by investors which includes altcoins and cryptocurrency financial products. While traditional portfolios attached to only one fixed asset class, a crypto portfolio allows investors to access a verity of assets. <\/span>Cryptocurrency investors can track their portfolio manually on a spreadsheet or rely on professional tools and software to calculate their holdings and profits. The tracker is essential not only for day traders but also for long-term investors and Hodler.<\/span><\/p>\n

What is asset allocation and diversification?<\/strong><\/h2>\n

Getting acquainted with the concepts and asset distribution is necessary for any investor who wants to create a crypto portfolio.<\/span> Asset <\/span><\/i>allocation<\/em><\/i> is the investment in different asset classes, e.g. cryptocurrencies, stocks, bonds, precious metals, cash…<\/span>Asset diversification<\/span><\/i> is the distribution of funds invested in different assets or sectors, for example, stock investment in a variety of industries: agriculture, industry, services, energy, healthcare,…<\/span><\/p>\n

The biggest benefit of both <\/span>asset allocation and diversification is to help reduce the overall risk.<\/span> In fact, cryptocurrencies are still a group of assets. Therefore, in the portfolio, investors can diversify coin and token products with different goals and conditions of use. For example, investors can allocate crypto portfolios with 50% of capital invested in Bitcoin, 20% in stablecoins, each 15% in NFT and Altcoins.<\/span><\/p>\n

Concentrated and diversified crypto portfolios\u00a0<\/strong><\/h2>\n

A new investor should focus on diversifying the portfolio. As mentioned, a diversified portfolio can minimize the risk of damage and overall volatility. Profits can make up for losses. That’s why investors retain their position in the market. While not all investments are profitable, the diverse and reasonable distribution of their assets will help investors earn a steady return in long run.<\/span><\/p>\n

However, to diversify<\/span> crypto portfolios, investors have to keep a close eye on the market. In fact, most investors try to beat the market with greater gains. Investment assets that generate good returns play a balancing role with underperforming assets. A portfolio with a high level of diversity is likely to be more profitable than a concentrated portfolio.<\/span><\/p>\n

However, managing a diversified portfolio requires investors to have knowledge and a lot of time to research and analyze the market. To invest effectively, investors must understand what they want and build investment strategy. Therefore, if the portfolio is located on different blockchains, investors must use a variety of wallets and exchanges to access their assets. This may seem difficult but it is the choice and investment mindset of each person, and diversification is always recommended.<\/span><\/p>\n

Cryptocurrencies and <\/b>financial\u00a0 <\/b>crypto products<\/b><\/h2>\n

Cryptocurrencies<\/b><\/h3>\n

According to market capitalization, Bitcoin (BTC) is the largest and most famous cryptocurrency. However, a balanced crypto portfolio will always include many different cryptocurrencies to reduce overall risk. Below are some cryptocurrencies.<\/span><\/p>\n