Crypto portfolio management is what many investors think they don't need but lack the most.
Tools and mental models should be the staples of every investor's crypto portfolio management to improve their performance. If you do not use these, you are likely going to get rekt sooner rather than later.
Despite all the memes about getting rekt, it won't only impact your financial future but also your mental health, your relationships, and your desire to ever invest in crypto again. That's why it's imperative to use proper crypto portfolio management. Most professional investors do, and you wouldn't expect to outperform the LeBron James of crypto investing without a professional investment approach.
Humbling yourself and modeling your approach after professionals is the easiest way to succeed in crypto investing.
While we may joke about apeing into the next dog coin or altcoins, preserving your funds and staying invested for the long game should be the main priority for anyone invested in crypto. This is what will be covered in the crypto portfolio management guide:
Rules to managing a crypto portfolio
Beginner crypto portfolio management mistakes
The best software and apps for tracking your portfolio
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What You Need to Know About Cryptocurrency Portfolio Management
Crypto portfolio management is the skill of using the right tools and right mental models to improve your financial returns from crypto investing.
Applying introspective and becoming a better investor with the help of technology is an overlooked aspect of crypto investing. The correct tools and knowledge are freely available on the internet and using them is not difficult. However, staying consistent is.
Most people get carried away by their emotions when investing or trading and sabotage themselves in that way. Cryptocurrency portfolio management will help you keep your emotions in check, track your performance, and identify your strengths and weaknesses when investing.
There are a couple of basic rules to follow when managing a crypto portfolio.
First, you need to have a balanced portfolio. Even with cryptocurrencies being highly volatile, many investors just cannot get enough and try to go all-in on one coin or trade with too much leverage. If you want to manage your crypto portfolio correctly, it is paramount that you have one in the first place!
Therefore, diversification is key. By spreading your risk, you reduce the chance of losing it all and keep your emotions in check. You are much less likely to make fatal impulse decisions if you keep diversification as one of your portfolio management tenets.
Diversification in crypto isn't easy, as many assets are highly correlated. Therefore, you should minimize your chance of total capital loss. You do this by investing the biggest part of your portfolio in large-cap coins like Bitcoin. Although Bitcoin will make far smaller gains compared to some altcoins, it will also lose far less of its value when you enter a bear market. Most investors underestimate the emotional impact of losses and think they are ok with losing a much greater sum than they actually are, or being in the red for a prolonged bear market.
Finally, you should track your investments. Especially if you spread your capital across multiple assets, exchanges, and wallets, it is very hard to keep track of their performance. Using crypto portfolio management software or apps will help you stay on top of your investments and allow you to adjust as needed.
Classic Crypto Portfolio Management Mistakes
You have probably made one or most of these mistakes as part of your learning curve in crypto investing.
Investing on a Whim Instead of Dollar-cost Averaging (DCA)
Many beginner investors see something they like and are quick to jump into a coin because of a recommendation or a social media post. However, the quicker you decided to invest, the higher the probability that you will regret it if it goes wrong. The best way to invest for the long haul is to dollar-cost average: buy a little bit of a coin at fixed intervals (e.g., monthly) regardless of the price. That way you are less likely to get influenced by short-term fluctuations and be "shaken out" by selling if there is a price drop.
Unless you have only one coin in one place, you should be tracking your investments. For DeFi investments you can use trackers like Zappier, Debank, Zerion, Apeboard and more to aggregate investments in one wallet across different blockchains. There is also an abundance of crypto portfolio management software and crypto portfolio management apps that you can use to stay on top of your investments.
Manage Your Expectations and Have an Exit Strategy
Even if you get the first two right and follow our other tips, you still might get tripped up by not thinking about when you want to take profit or cut your losses. For every investment or trade, you need to know:
Why you invested
When you plan to take profit and why
When you want to cut your losses and why
What new information could change your investment thesis
By managing your expectations correctly, you are reducing the chance of impulse decisions on days of big gains or losses.
Finding the best crypto portfolio management software is a bit like looking for the sharpest needle in a pile of needles: they all do the job, and it's hard to tell which one is the best. We do have a couple of recommendations to make your life easier, though.
CoinMarketCap Portfolio Tracker
The easiest way is to use our in-house CoinMarketCap portfolio management tracker. It comes with real-time price data, keeps your data secure, and tracks your profits, losses, and portfolio valuation. Each coin comes with extra data, and you can create custom watchlists, set price notifications, and compare prices, volumes and market capitalizations.
Creating a portfolio of your holdings is as easy as entering the quantity and price at which you bought a cryptoasset.
CoinTracking is another solid option that allows you to stay on top of several thousand different cryptocurrencies. You can directly sync with the blockchain and get interactive charts for your trades and different coins. The site also offers up to 25 customizable crypto reports, although you need a premium package for unlimited exchange connections.
Shrimpy is a popular tracking tool with an interactive user interface linking your exchanges and wallets. You can explore different trading strategies with the advanced portfolio backtesting option and track your balance changes in your hardware and software wallets. However, Shrimpy lacks a trading terminal.
Best Crypto Portfolio Management App
Almost all portfolio trackers come as a web-based version or as an app. Thus, the best crypto portfolio management software will also be the app: we recommend using the portfolio tracker on our CoinMarketCap mobile app, availale on iOS and Android. However, there are other good options on the market like:
How to Choose a Good Crypto Portfolio Manager
If you want to really step up your crypto portfolio management game, you may want to look at a portfolio manager. Again, many options on the market offer adequate solutions, so unless you are a professional trader managing a big portfolio, you should keep it simple. However, if you want to find a good crypto portfolio manager, you should look for:
Multi venue connectivity
Book aggregation across exchanges and dealers
Best execution routing
Real-time and historical reporting:
Real-time and historical market data
Performance and exposure analysis
Trade aggregation across multiple exchanges and counterparts
Futures and funding rates
The Best Crypto Portfolio Manager
A good option incorporating all of these features would be Hedgeguard. However, this is an institutional-grade crypto portfolio manager. You will likely not need it or even have the skill to use it unless you have been investing in crypto for a long time and have significant experience with advanced financial instruments like futures, options and derivatives.
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