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Whether you have one crypto asset or multiple crypto assets, to get the most out of your investment, you need to know how to manage your portfolio correctly.
Especially with the increase of crypto investors in Nigeria and Africa, you must devise an investment strategy to help you maintain a balanced crypto portfolio. In this article, we’ll be discussing five ways to manage your crypto portfolio.
What is a Crypto Portfolio?
According to Techslang, A cryptocurrency portfolio is a means to manage your inventory of online currency investments. It can be hosted on a cryptocurrency management software that helps track each coin’s performance and provides analytical tools.
Crypto investors use their portfolios to take stock of their assets and ensure they grow over time. A cryptocurrency portfolio as such allows investors to keep track of their holdings, so to speak, so nothing goes to waste.
The aim should be to build a flexible cryptocurrency portfolio. Several crypto investors spread their capital around various cryptocurrencies to lessen risks.
Importance of Having a Diversified Crypto Portfolio
The famous saying goes, “Do not put all your eggs in one basket,” which also works for crypto. The importance of having more than one crypto asset in your portfolio cannot be overemphasized. Below are some benefits to diversifying your crypto wallet.
A diversified portfolio method will expose an investor to assets that the investor won’t in any other case be exposed to. Markets regularly experience a time of rotation in which some sectors see an influx of capital at another rate, ensuing in a single quarter outperforming another. This means that the worst acting sector – or market – should doubtlessly be one of the best performings in the following year.
Due to crypto volatility, having just one crypto in your portfolio is risky. As a crypto investor, it is essential that you have different altcoins in your portfolio and not just the popular cryptocurrency, Bitcoin.
5 Ways To Manage Your Crypto Portfolio
1. Set a Financial Target:
To revel in profitability and sturdiness with crypto assets, it’s vital to outline what financial goals you desire to meet over a certain period. You need to have an end goal in order to manage and maintain your crypto assets and portfolio properly.
2. Apply Dollar-Cost Averaging (DCA):
Dollar-cost averaging is an investment strategy where an investor invests a total amount of money in small increments over a period of time instead of investing all at once.
It is a long-term investment strategy so it lessens the impact of crypto volatility and allows you to revel in a greater effective and sustainable increase of your portfolio over a greater prolonged duration of time.
This is a good strategy when it is currently a bear market.
Read Also: WAYS TO SURVIVE IN THE BEAR CRYPTO MARKET
3. Use a Crypto Portfolio Tracker:
A crypto portfolio tracker is a digital app or website, that allows you as an investor to monitor the change of price and value of your various crypto coins so you can control your portfolio properly.
When you make multiple crypto assets in your portfolio, it can be difficult to keep track of them, that’s where a tracker comes in.
Some popular crypto portfolio trackers are CoinStats, Quadency, CoinTracker, Coin Market Manager, and CoinMarketCap.
4. Do Not Let Fear and Greed Take Over:
Fear or greed amongst traders could make the crypto marketplace significantly liable to drastic ups and downs. In a situation of fear and greed, it is important you stay calm and keep your emotions in check.
Another cause why many investors fail to manage their crypto portfolio well is FOMO (Fear of missing out). Peer pressure is another cause why many crypto newbies typically make hasty choices and purchase an asset at high prices.
5. Always Have an Exit Plan:
Considering your exit plan prior to getting into the crypto market can be a compelling investment and portfolio management method.
However, not having an exit strategy regularly causes traders to maintain their position for a prolonged period, even though it incurs losses. Conditions like these may be unfavorable for your crypto portfolio management and bog down your investment techniques in the long run. Successful traders generally tend to reflect on their exit strategy each step of the way, even prior to getting into the crypto marketplace.
To correctly manage your crypto portfolio, you need to have a solid plan for every step in the investment process.
As earlier mentioned, putting all your eggs in one basket and not diversifying your crypto portfolio is very risky. Crypto portfolio trackers are an excellent asset for keeping a tab of your crypto assets’ ever-changing value and making the investment process a lot easier.
Managing your crypto portfolio does not have to be complicated. With these tips, you can manage your portfolio more effectively and get the most out of your investment.