The Complete Guide to Crypto Portfolio Management

The Complete Guide to Crypto Portfolio Management

May 18, 2022 Fortuna Capital

A cryptocurrency portfolio is a set of digital assets the investor has chosen as a part of their holdings for short, medium or long-term returns. It can be anything from a diverse group of cryptos to Bitcoin ETFs, NFTs, or real estate in the metaverse. 

Before investing in crypto-assets and creating an investment portfolio, the investor should have studied the market in which he wishes to operate. Then you need to choose the best Crypto Asset Management Company and understand their performances and strategies.

This plan will depend fundamentally on the preferences of the Crypto Portfolio Management firm and its key fund manager. All investors must establish a plan, whether a beginner or an expert. A written plan with clear objectives helps avoid deviations along the way. 

The strategic investment plan created by the crypto fund manager will indicate what you want to trade, how you will do it and at what points you will enter and exit if you sell.  

Why do you need to manage your crypto portfolio?

A Crypto Portfolio Management firm needs to manage an investment portfolio correctly. Some Crypto Asset Management companies offer Crypto Portfolio Management and Crypto Wealth Management services.

Cryptocurrency portfolio management is all about creating and managing a basket of digital assets. Suppose the crypto portfolio manager operates exclusively with cryptocurrencies. In that case, he may have Bitcoin, Ethereum, Link, DOT, BNB, Solana, or any other digital currency of his preference with which he hopes to achieve returns.

Crypto portfolio managers must be clear about their assets’ return expectations. Are you looking for a basket of investments with less exposure to volatility? Or are you a more aggressive investor and take more risks to raise your bet for higher returns in the short term? Or do you prefer to buy and hold blue chips and not worry about short-term volatility? 

They are two very different investment approaches. One follows a strategy with a very active system, and the other uses a passive system. The latter has the advantage that your portfolio will have much lower operating costs and commissions and reduce risk. 

Instead, Crypto Asset Management firms who opt for the active approach must constantly keep an eye on the market. They are traders who trade crypto assets, perform technical analysis and track signals for profit opportunities. 

Behind the crypto portfolio management process is usually a crypto wealth manager. A professional manager who is competent with the financial and operational knowledge of the market can help you make your investment achieve its objectives. Their function is to guarantee that the cryptocurrency portfolio is managed in the most profitable way possible while reducing investor risk. 

What is your risk tolerance?

Investments in crypto portfolios are not entirely risk-free. There will always be black swans (unexpected events) or situations that generate ups and downs in the price and performance of assets. 

It is even more so when it comes to volatile assets that they generate higher returns than any other on the market, precisely because of their nature. In addition, cryptocurrencies are part of a rapidly developing industry sector. 

Risk tolerance is simply the risk of loss you are willing to take. Measuring it is not easy because it involves the experience of the investor or crypto wealth manager operating in the market and their profile. 

Experts affirm that without losing a certain amount of money in losses, it is tough for an investor to identify their risk tolerances. That is why most brokers or exchanges offer beginner training by carrying out operations on their platforms without real money in paper trading.

Although the truth is that when we invest real money in a trade or investment, we feel the emotion of the game. Once the person has determined their level of risk tolerance, it is essential to have clear objectives so as not to despair or make mistakes that can be costly. 

When investors can accurately measure their risk limits and invest in a cryptocurrency portfolio that accurately reflects their risk tolerance, time horizon, and personal goals, they will better achieve their financial goals.

As you look to identify the best among the crypto portfolio management companies, you will need to ask the portfolio manager questions about risk mitigation strategies, the risk tolerance level at the portfolio levels, understand how they manage their crypto portfolio and get a good sense of the mental make-up of the fund manager. A good crypto portfolio management company will help you assuage your fears and show a deeper understanding of the market, along with sharing their strategies and temperament, which are essential in helping you make the right choice.

How to manage your crypto portfolio

Some Crypto Portfolio Management companies believe that managing a portfolio means only going long on cryptocurrencies. One of the principles that the crypto portfolio manager should keep in mind is diversity. In maintaining a balanced portfolio, it is necessary to select a diverse group of digital currencies. A diverse portfolio also gives the investor the advantage of choosing a better-performing currency. Just as they don’t all rise simultaneously, they don’t fall together. Each of the 17000 existing cryptocurrencies is trying to outdo itself to compete, and it’s the role of the portfolio manager to ascertain and identify asymmetric risk and uncorrelated assets. Rebalancing portfolios and managing asset weights is a crucial responsibility of any Crypto Asset Management co.

Crypto portfolio management tools

Many Crypto wealth management firms use a wide range of portfolio trackers that allow you to gather all the assets in one place. This makes it easier for crypto portfolio managers to track investments more efficiently. When the investment portfolio is extensive, it becomes more challenging to track investment gains and losses. 

Here are some of the best crypto portfolio tracking tools that top crypto asset management firms use worldwide.

Coin Tracker

It serves to track more than 300 crypto exchange platforms and multiple cryptocurrencies. It is a very secure platform that shows market fluctuations in real time. It offers performance charts and has a unique built-in tax function.

CoinMarketCap

It is a handy free crypto portfolio tracker to monitor transactions. It allows you to create multiple portfolios but lacks certain premium features like other paid tracking platforms.

CoinStats

This premium tracker, available for PC and mobile devices, provides personalized crypto market news. It offers analysis and graphs on the growth of a particular asset or the entire portfolio. It also shows which cryptocurrencies are the most profitable and generates the most losses and exchange fees.

Delta

This investment tracker provides a bird’s eye view of the cryptocurrency investment portfolio. The tool is designed for diverse portfolios, including digital assets and other securities. It also has a news section that allows analysis of the transaction history.

CoinGecko

It is considered one of the best tools for tracking free crypto portfolios, especially for crypto wealth managers whose trading frequency in the market is lower. You can make manual entries, and you can also set up multiple portfolios.

How to Setup a Portfolio

These four easy steps will help the crypto wealth manager to set up their crypto investment portfolio hassle-free: 

1. Study and master the basics of investing in cryptocurrencies. Dip your toe and invest in cryptocurrencies based on your research. Investing in a business, you don’t know well or understand is an easy mistake. So, better get good advice on cryptocurrencies and how the crypto market works. 

2. Analyze various types of crypto assets. In addition to Bitcoin and Ethereum, there are hundreds of altcoins. Many of them are projects with innovative proposals and very high growth prospects.

3. Choose cryptocurrencies according to their performance and investment prospects. Many start with known assets that have proven to be mature and safer investments over time. You can then move on to other newer cryptos, monitoring their performance, updates, and market capitalization. 

4. Choose a popular cryptocurrency platform to store your assets and track your investment portfolio. Remember that the exchange is your bank of crypto funds. You know you have them because you trust them. If you trade with a professional crypto portfolio manager, he will tell you which one is the most suitable. 

5. Divide your portfolio according to investment risk (high, medium and low). Whenever you invest in cryptocurrencies, let your risk tolerance be your guide. To help balance your portfolio, you can add stablecoins mixed with higher-risk emerging projects.

How do you modify a portfolio?

Since the crypto market is so volatile, it is advisable to rebalance the investment portfolio from time to time. Crypto wealth management firms have wealth managers whose sole function is to manage your crypto portfolio to deal with the volatility and asset allocation of each cryptocurrency in the basket.   The modification or rebalancing of the portfolio is nothing more than the realignment of risks with the financial strategy by weighing the assets the investment portfolio holds. According to the risk objective and the investment goals set, it consists of buying or selling assets.  Portfolio rebalancing allows the investor to average a better price when in losing positions—at the same time, preventing market movements from affecting the crypto wealth management firm’s strategy. 

Knowing your investment style and understanding your risk tolerance levels are essential in the area of crypto investments. Knowing both can help you identify the right crypto portfolio management companies that can help manage your crypto portfolio.

Crypto assets are among the investments that need more frequent portfolio rebalancing. Trusting and working with the right expert and crypto wealth management firm will allow you to sleep better, knowing that your funds are safe in the right hands.