Balancing a portfolio of cryptocurrencies: How to diversify investment funds

How to achieve the best result and get a better chance of success?

The solution is to regularly balance your crypto portfolio and carefully consider your asset allocation strategy. And although balancing is not highly complex, the results can exceed expectations several times.

What is a crypto portfolio?

It is a set of cryptocurrencies owned by a trader or investor. Such a portfolio can hold many different assets — from altcoins to crypto-financial products. You can track your portfolio in several ways:

• Manually, using a spreadsheet;
• Use dedicated software for asset management;
• Use the portfolio tracker in the Balance section of the Kaiserex platform.

Distribution and diversification of assets

What is the concept of these terms?

In order to get started, investment funds need to be diversified, that is, invested in different asset classes (e.g., cryptocurrencies, stocks, bonds, precious metals, etc.). Essentially, diversification means the distribution of investments across different sectors or assets. For example, you can diversify your holdings by investing in different sectors, such as technology, agriculture, or energy.

Both of these strategies help reduce risk.

Why diversify a portfolio?

Managing your portfolio can help you generate profit from each coin. With proper asset allocation and diversification, the chances of making a profit in the long run increase.

It is the diversification strategy that will ultimately determine how well your portfolio tracks the market. Yes, managing a crypto portfolio requires a lot of time and effort, especially if it is filled with assets from different blockchains. However, diversification is always desirable, at least to a certain extent.

What are crypto portfolio trackers and which ones to choose?

These are applications or services that allow you to track the movement of your assets and the overall progress. We recommend paying attention to the following trackers:

• CoinGecko. Allows you to track not only your portfolio but also cryptocurrency prices. You can use the browser version for free or download the mobile application.
• CoinMarketCap. A tracker that has developed its own portfolio tracking function. Since this tracker cannot be automatically connected to an exchange or a wallet, you will have to manually add your assets to use it. In addition, there is an option to add the value of purchased assets for more accurate profit tracking. Free for desktop and mobile.
• Delta. Allows you to view your traditional investments and crypto portfolio at the same time, and is supported by 20 exchanges and various wallets. There is a free and a paid version. The only drawback is that you cannot trade directly in the application.

Where and how is it best to store cryptocurrency?

We suggest getting acquainted with the most reliable methods.

• On the Kaiserex exchange. It is the simplest and most comprehensive way of storing cryptocurrency, which provides wide opportunities for exchange. You will have access to a large number of cryptocurrency pairs, and will be able to quickly sell or buy crypto assets and withdraw money to any other cryptocurrency wallet or to your euro account.
• In a “cold” wallet. The safest way to store cryptocurrency for a long time. Since the wallet is not connected to the Internet, the data to access Bitcoins is safely stored away from hackers.
• Keep one part in euro and the other part in USDT. The Tether exchange rate is stable and always heading towards a 1:1 ratio with the US dollar. According to the forecasts of cryptoanalysts, the USDT rate will also be stable over the next six months. On the Kaiserex platform, you have the opportunity to store these assets in your personal account in any amount.

How to balance your crypto portfolio?

There are a few simple rules that we recommend you follow.

• Allocate investments according to risk levels – low, medium, or high.
  A portfolio consisting mostly of high-risk investments is definitely not balanced and can bring not only good profits but also big losses.
• Rebalance your portfolio as needed.
  The cryptocurrency market has a high level of volatility, so decisions should be made depending on the current situation.
• Strategically allocate new capital.
  This will help avoid overloading a single direction of your portfolio. It is important to carefully think through each step and not succumb to emotions, because when receiving a large profit, there may be a desire to invest even more.
• Integrate stablecoins.
  This will help ensure liquidity in your portfolio, lock in a profit, or exit a position.

And most importantly, get as much information as possible from all sources available to you. You are investing your own funds, so it is important to secure positions that will allow you not to suffer significant losses. Kaiserex is always ready to help you with this.