How to Build a Cryptocurrency Portfolio? A Comprehensive Guide

How to Build a Cryptocurrency Portfolio? A Comprehensive Guide

What is a Crypto Portfolio?

A well-balanced cryptocurrency portfolio is an investment option that consists of various types of cryptocurrencies. These coins should offer different utilities and harbor varied risk thresholds. Such a portfolio does not have a single point of failure because, in case of any price changes, the entire value of the reserves does not change.

At the same time, the investors should retain a balance between their crypto investment and other asset allocations. It is important to consider that cryptocurrencies are a high-risk asset. Therefore, most experts suggest making it only 5% to 10% of the total investment portfolio.

Top Ways to Diversify Cryptocurrency Portfolio

Here are 7 tricks that cryptocurrency investors can use to add more diversification to their investment portfolio:

Invest in Top Coins

It is a good practice to invest in the top crypto project hailing from a particular industry or sector. This brings more stability to the project and narrows down the investment choices to a few candidates. This method entails excluding stablecoins since they do not undergo any value increment.

Different Utilities

It is best to invest in cryptocurrencies that offer a diversified set of utilities such as payment tokens, DeFi coins, gaming currencies, Metaverse currencies, and privacy coins etc. In this manner, investors can retain the value of their holdings during bear markets or downtrends.

Smart Contract Blockchains

Smart contract blockchains have the ability to create and host decentralized applications. Such blockchains have the potential to increase their utility and add new updates to the network continuously. Ethereum, Solana, Cardano, Avalanche, and BNB are some examples of smart contract blockchains.

Trading Ratio

It is not possible to claim that any cryptocurrency is a 100% safe investment. However, Ethereum and Bitcoin are the two most popular and widely adopted coins around the globe. Therefore, it is imperative that investors invest the highest ratio of the crypto investment capital on these two virtual currencies.

Crypto Stocks

Investors can also look at stock options from cryptocurrency companies. These companies can have exposure to virtual assets in different aspects and bring more diversity to their crypto investment portfolio.

Growth Coins

Growth coins are cryptocurrencies that are currently undervalued but have the potential to gain considerable traction later. It is important to note that growth coins also carry a substantial risk of loss. Investors can pick a few small cap altcoins to their portfolios after conducting research.


A well-balanced crypto portfolio is not an object but rather a continuous process. Investors have to change and upgrade their trading reserves at regular intervals based on various economic, political, internal, technical, and regulatory factors.

Some cryptocurrencies are good for long-term investment while others are more suited for short-term trading. 

Advantages of a Well-balanced Crypto Portfolio

By spreading the investment capital in different types of cryptocurrencies the investors are prevented from depending on the success of failure of a singular coin.

A well-balanced portfolio allows investors to take positions in select and most successful cryptocurrencies.

Balance investment narrows down the scope of investing saves time and effort on the part of investors and allows them to focus on managing their existing portfolio more diligently.

A balanced portfolio reduces clutter from investment focus and lets the investors effectively manage their holdings and carry out market analysis.

Disadvantages of Well-balanced Crypto Portfolio

Creating a well-balanced cryptocurrency portfolio can be a time-consuming process.

Investors have to generate an effective trading strategy to manage their trading portfolio and make a lot of effort to locate the cryptocurrencies that fulfill the criteria.

Market volatility can still devalue a well-balanced and sufficiently diversified trading portfolio. Investors need to spend time and energy to rebalance their portfolios continuously to avoid losses and preserve existing profit.


Contrary to popular belief, cryptocurrency trading is not a side hustle. In order to print substantial gains, investors have to use various techniques such as bringing more diversity among assets and adopting risk-management techniques to avoid losses.

Richard Dodson
About Author

Richard Dodson

Richard Dodson, a titan in crypto journalism, delves deep into the blockchain ecosystem with clarity and precision. With an innate ability to simplify intricate details, Richard's articles demystify the world of digital assets. His authoritative voice and profound insights make him a go-to expert in cryptocurrency discourse.

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