March 08, 2021

Crypto Portfolio Explained


Now and then swings in crypto prices can reach 20-30%. The most reliable coins are not immune to this either. While high volatility offers immense prospects for earnings, it’s also associated with significant risks. This is where the beauty of the crypto portfolio comes into play. This convenient tool can diversify the risks of investments and allocate capital appropriately in order to achieve the goal. But first things first.

What Is a Cryptocurrency Portfolio?

To give you a very wide, non-generalized definition, it’s a complex combination of various virtual assets in the right proportion. The key objective is to ensure the maximum returns with a minimum possible risk for the investor.

In contrast to the investment portfolio of the stock market, risk diversification, in this case, is achieved not by investing in different assets, but by purchasing various types of one - virtual currency.

From the point of view of the financial experts, forming a traditional investment portfolio is necessary only with large capital. When it comes to the crypto market, everything is different. Creating a portfolio is important even for small investments. It will allow you to participate in a greater number of projects, a contribution to which can bring a high income in the future.

Why Should I Create a Crypto Portfolio?

Today, there are many virtual coins, but not all of them can be profitable for you. By investing money in one asset, the person can blow everything in case of an actual collapse of the exchange rate. A crypto portfolio allows you to reduce losses. What is more, that should cut down on your risk factor.

Imagine: you bet everything on one coin. When its rate drops by 20%, you lose some of your capital. But here comes a but. If your investment was distributed among the three assets in an equitable fashion, the result would be different. If the exchange rate of one currency fell by 20% and the rest grew by 15%, the user would avoid losses and overcome temporary difficulties.

Remember: no matter how stable the coin is, its price always fluctuates. Only the right allocation of funds can make the investor resistant to sustained shift in prices.

Among other advantages of a crypto portfolio is a high chance of successful investment. The crypto market is quite young, but it has a dynamic and fast-paced nature. Not all investors were able to appreciate the prospects of crypto. Nevertheless, there is a growing demand for digital assets, which can lead to a persistent rise in prices. Most of the coins represent promising projects that could be very helpful to mankind. They can also attract a new audience to the market and promote the flow of investment.

How to Create a Crypto Portfolio?

The main thing here is a wide selection of assets. A crypto portfolio should contain all the tools to earn money and reduce risk in the right proportions. Most of its components have to include top cryptocurrencies with stable growth. They should also be popular among users.

The cost-effective and risk-averse solution would be:

  • to invest 80% of the total capital in high-rank coins that have a stable exchange rate;
  • to invest 15% in new altcoins that have high liquidity and an average exchange rate;
  • to leave 5% for promising projects that are at the initial stage of development.

We remind you that with the help of our platform, you will also be able to minimize the undesirable risks associated with crypto. Equite allows investors to familiarize themselves with the success story of the trader and start trustful collaboration. To find out more please visit our official website.

Don’t forget to follow us on social media: Twitter, Facebook, or Telegram