Investing in cryptocurrencies is always fraught with high risks. In such conditions, it is necessary to competently approach the creation of a crypto portfolio in order to minimize risks and ensure the highest profit. In this article, we’ll talk about why you need a balanced cryptocurrency portfolio and how to create it.

What is a balanced crypto portfolio?

A balanced crypto portfolio is a collection of several types of cryptocurrencies. In a balanced crypto portfolio, assets are distributed approximately like this: 25% are low-risk and high-risk assets, and the remaining 50% are assets with medium risk.

This is one of the most common types of portfolio, which contains the most optimal ratio of risks and potential profits.

Balancing allows you to get more profit than with the conservative approach, which involves the use of predominantly low-risk assets, and does not contain such high risks as with an aggressive approach.

Why do I need a balanced portfolio?

One of the main goals of creating a crypto portfolio is to diversify risks and make a profit. When creating a balanced cryptocurrency portfolio, you must follow the rules of risk management, which will help minimize losses.

For this, it is necessary to distribute shares taking into account the intended goals and possible risks, based on:

  • Current market trend. It should be determined which assets are growing more actively and which are slower. For example, in the crypto community, the term “alt season” exists, which means that bitcoin behaves calmly, and altcoins are actively growing in price. When falling, the correlation between events and the degree of their influence should be taken into account.
  • The general trend of the cryptocurrency market. If, despite the active growth of the crypto market, the asset continues to fall, and the main growth areas resemble Pump & Dump more, the asset has weak prospects, and investors are practically not interested in it. It is necessary to correctly determine whether cryptocurrency is promising or not.
  • News background around cryptocurrency. It should be noted how interested the community is and what updates are planned in the near future, which can positively affect the value of the coin.

When allocating assets, it is important to take into account the investment horizon – the period during which it is planned to store funds. Investments can be short-term, from several hours to several days, and long-term, the duration of which can reach several years. The shorter the time, the more attention needs to be paid to the analysis of the cryptocurrency market.

If you fill the crypto portfolio rebalancing mainly with high-risk assets and which strongly correlate with each other, then the probability of loss of funds increases in proportion to the size of the share.

To mitigate risks, the portfolio must be balanced in such a way that profits from more stable assets cover losses from high-risk cryptocurrencies.

Portfolio rebalancing

An important step in asset management is the portfolio rebalancing, without which no investor can do. Over time, the state of crypto assets changes, so you need to constantly monitor and revise the distribution of coins in the crypto portfolio.

For example, to sell the most grown assets and to buy sagging in price. Even if it was planned to hold the cryptocurrency for several months, but after a month the asset grew, and there are no fundamental factors indicating continued growth, then it should be replaced.

Or reduce its share in the portfolio and increase the share of crypto assets, which are currently lagging behind in price.

It is important to note that the work of portfolio rebalancing becomes noticeable on the distant investment horizon.


Moreover, it may happen that the selected cryptocurrency did not live up to expectations. For example, an asset fell into a portfolio before an important event, but neither before the event, nor after its occurrence, significant growth occurred. Then you should sell coins and add a more promising cryptocurrency instead.

The crypto market has a large number of factors, some of which can be missed or not taken into account. For a more efficient investment, the best solution is to use auxiliary resources, such as, an automated service for managing a cryptocurrency portfolio.

Holderlab analyzes crypto assets using a correlation matrix and finds the most optimal coin weights in the portfolio, after which it rebalances if necessary.

Portfolio diversification

When creating a balanced portfolio, you should not forget to follow the rules of diversification and avoid typical mistakes that lead to losses. It is necessary to select cryptocurrencies supported by strong fundamental factors, and not pulsing without reason. If untimely buying and selling assets, the portfolio will rapidly decline in value. Traders are subject to a distorted perception of the market, so you need to control emotions and not succumb to the fear of lost profit.

Crypto-investment implies the existence of flexible thinking, which consists in a thorough analysis and prompt response to changes in the market situation. This will allow you to get the most profit when managing a balanced crypto portfolio.