How Crypto Investors Can Effectively Manage Their Crypto Portfolio In 2021

According to research, it is estimated that the cryptocurrency market size will skyrocket from $1.6 billion in 2021 to a staggering $2.2 billion by 2026, at a CAGR (Compound Annual Growth Rate) of 7.1%.

Well, it’s pretty obvious that the crypto space is exploding in popularity. Over a thousand cryptocurrencies are now available with Bitcoin and Ethereum taking the lead. These coins and tokens have captured the attention of investors and speculators in the space as they seek out high-yield investments.

Basics of Managing a Crypto Portfolio

Effectively managing your cryptocurrency portfolio is one of the fundamental steps to maximizing the value of your crypto holdings. And as such, it’s essential that crypto investors adopt practical investment strategies that will guide them as they dive into the cryptocurrency trading field.

Before plugging into the crypto trading opportunities, it’s crucial that investors develop a method to diligently assess potential trades, key-value propositions, community size, uniqueness, functionality, market offerings, and more, to ensure the success of their crypto portfolios.

Of course, crypto investments are risky. However, by applying the right strategies, investors can reduce the risks while also making smarter investments. Now, let’s take a look at the unconventional ways crypto investors can effectively manage their portfolios to achieve profitable investments in 2021.

Exhaustive Research

Considering a largely unregulated world and with constant price fluctuations, it’s important that investors carry out exhaustive research on currencies before investing in them. Most importantly, it’s wrong for crypto investors to buy a coin based on hype as this might turn out to be a bad investment.

Having a deep understanding about a crypto project helps to determine the quality and value of the project. Thus, before investing in a coin, there are certain steps investors must take to minimize investment risks. Some of the basic steps include:

  • Searching the internet for the coin reviews.
  • Assessing the whitepaper, roadmap, tokenomics, the dev team, and advisors.
  • Evaluating the coin’s market cap, trading volume, and total versus circulating supply.
  • Assessing the strength of its community.
  • Estimating how much of a use case the token or coin has.

With this, investors will be able to determine the market value of the project as well as a potentially secure high return on investments.

Diversification

Savvy investors know that investing all their capital in a single asset isn’t the best strategy for effectively managing their portfolio. Hence, it’s advisable for crypto investors to reduce the overall risks of the portfolio by investing in multiple assets. A crypto portfolio should contain different crypto projects with diverse use cases to avoid investors exposing themselves to a lot of risks.

According to research, it reveals that there is massive variability in the monthly difference in returns between different crypto assets. Moreover, due to fear of losing out (FOMO), many investors make the mistake of shooting all their capital into one crypto project due to market hype.

Holding a single asset provides investors with no exposure to other well-performing crypto assets. For instance, holding only bitcoin wasn’t such a bad idea until the last few years. The total value of bitcoin against the overall value of all crypto assets reduced from 85% to less than 60%. Statistically, this shows that other assets grew in value and outperformed bitcoin.

Thus, with portfolio diversification, investors can manage risks and minimize the volatility of crypto assets’ price movements.

Crypto Portfolio Trackers

The value of each cryptocurrency changes all the time. And as such, investors might find it exhausting to keep track of the value of their coins. However, with cryptocurrency portfolio trackers, crypto investors can easily stay informed on the value of their investments as well as subsequent changes in portfolio and ROI.

Crypto portfolio trackers are an essential tool for traders with more than 3 coins in their portfolio. Different cryptocurrency portfolio trackers have different sets of features and investors can use trackers to determine the best option for their investment goals.

With these practical steps, crypto investors can effectively manage their crypto portfolio in 2021.

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