Guide for Building a Cryptocurrency Portfolio

Key points

• Portfolio Diversification
• Scalping
• Staking
• DYOR (Do Your Own Research)
• Portfolio Rebalancing

Ten years ago, who would have believed that Bitcoin will have the power to change the world. Today, everyone who didn’t believe in Bitcoin back then regrets their decision of not investing in Bitcoin. 

With time, thousands of cryptocurrencies were created, some ended up being rug pulls, failures, and some turned out to be successful. 

Investing in a volatile market like cryptocurrency holds huge risks, so it is always recommended to invest with caution as high profits are mostly associated with high risks. 

For a new investor, it is important to build a portfolio that offers good returns. Discussed below are some tricks that will help a new investor in developing a profitable portfolio. 

Portfolio Diversification

Diversifying your portfolio is a simple and effective technique for risk management. It is not wise to invest in one cryptocurrency, in the event of a market crash or scam; a diversified portfolio will help the investor to survive the event. 

For every investor, he must have at least one of the below categories in his portfolio. 

Cryptocurrencies Belonging to Asset Class

These are cryptocurrencies with a single functionality of transaction. These cryptocurrencies are usually the fork of Bitcoin. These cryptocurrencies are top cryptocurrencies, having low risk and offering medium returns in a bull run. Bitcoin (BTC), Bitcoin Cash, and Litecoin (LTC) are examples of such cryptocurrencies.  

Cryptocurrencies Belonging to Infrastructure Class

The coins in this class are native to the blockchain ecosystem. The demand for these coins is completely based upon adoption, collaboration among institutions, and the blockchain ecosystem. Ethereum (ETH), EOS, and Cardano (ADA) are examples of such cryptocurrencies. 

Cryptocurrencies Belonging to Service Class

These are cryptocurrencies belonging to organizations, looking to offer special services or solve a problem in the crypto space. These are coins that offer huge returns but are also very riskier. 

To have a safe and profitable portfolio, all investors should include all these three classes of crypto assets into their portfolios.

Scalping

Scalping may help investors in making quick profits and may be considered as an important element of earning in cryptocurrencies. But an investor shouldn’t invest more than 10% of his portfolio in scalping. 

Staking

If a cryptocurrency investment is being made for a long duration, an investor should stake his holdings, to earn interest for that period, instead of keeping it in exchange.

DYOR (Do Your Own Research)

For every investor, it is important to conduct his research about the cryptocurrency market, since there are many malicious elements present that may guide an investor into making wrong investments. Listening to experts is essential, but it is wise to analyze the information before making any investment decisions.  

Portfolio Rebalancing

Portfolio rebalancing is to reorganize portfolios from time to time. Reorganizing of the portfolio is done as per the market condition and is also very essential to make good profits. It is also considered to be an effective method to earn profits in cryptocurrency. 

Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.

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