Managing a crypto portfolio refers to balancing between a diverse set of crypto assets across many different crypto exchanges.  It’s an essential skill for using crypto assets and profiting from trading them, somewhat similar to managing a portfolio of stocks and bonds.

The process can be challenging for a novice investor, and there are crypto management companies that offer to take over the work in exchange for a fee.  Regardless of the way an investor chooses, they should be firmly in control of the principles that the manager will apply to their portfolio.

Choosing the Right Exchange

The first step towards managing a crypto portfolio is to choose the crypto exchanges you’re planning to use carefully.  The main features to look for are safety, the volume of trade, and the offer of currencies and coins that could be traded at the exchange.

Exchanges also differ when it comes to how their interface is set up and what kind of fees they charge for their services.  Not all exchanges are suited to the needs of novice investors, and not all can handle investors who plan to trade large amounts.  It pays off to shop around and choose an exchange that suits your needs.

 Security Practices

Keeping your account and, therefore, your assets safe is paramount to any investing and management practices.  Most crypto exchanges offer a set of basic security features, and some go the extra mile by using additional security practices.  It’s up to the user to choose if they need those additional features and thus costs.

Two-step authentication is one of the basic features that any good crypto exchange should provide.  It should also offer a password management system that allows users to access their accounts while staying safe easily.  The exchange should also update its security features regularly and have an IT team dedicated to improving the security system regularly.

Tracking the Portfolio

Keeping track of the portfolio provides the investor with key information about the assets they have and their spot in the market.  There are countless tools that offer these services, and many of them allow users to centralize the process and track several exchanges using a single app.

Many tools offer real-time price tracking, ensuring that your portfolio value reflects current market conditions.  They also provide insights that you can only get from the bird’s eye view of the portfolio rather than tracking each crypto asset separately.

Manual Tracking Options

 Even though the tools we mentioned have their advantages, they may be too expensive for new investors.  Small-time investors can, therefore, stick to manual tracking options until their investments pay for the tools on their own.

Simple spreadsheets can be used to record trades, balances, and transaction details.  Manual tracking can also be customized to suit your needs in particular, and such a level of personalization isn’t available with tracking tools.  The main downside to this approach is that it’s time-consuming and work-intensive for the investor.
Separating Trades by Category

Categorizing each trade provides portfolio managers with deeper insight into how their crypto assets are doing and allows them to change their trading strategy based on it.  The key to doing so is to choose the categories that suit your trading style. 

-Trades can be separated by type into buys, sells, swaps, deposits/withdrawals, and rewards.
-They can also be divided based on their purpose: long-term investments, short-term investments, income (crypto used as payment for goods or services), and utility transactions.
-It’s also useful to separate the trades based on which crypto exchange they are traded on.
-Many investors separate their trades based on how they are taxed.

Using Exchange Features

Crypto exchanges provide a variety of features that investors can use to manage their assets.  These can be somewhat intimidating to novice users, but that shouldn’t be the reason not to take advantage of them.

The tools include API exports, profit and loss calculators, and trade histories.  If the investor is using multiple platforms, they should make sure to choose platforms that have the same baseline features and, therefore, work with the same set of tools on each platform.

 Balancing the Portfolio

 The most important way of avoiding overexposure to a single asset is to balance the portfolio so that it includes a variety of different assets.  Each portfolio should contain different types of cryptos (stablecoins, decentralized coins, NFTs, and like), and each portfolio should have at least two crypto assets of the same category.

A balanced portfolio is one that won’t tank if one of your crypto assets does poorly.  Similar principles are used when creating a stock portfolio or when managing any traditional financial assets.  The goal is not to put all your eggs in one basket and to reduce the risks.

 Using Multiple Exchanges

 It’s equally important to diversify the crypto exchanges you’re using for the same reasons.  This starts with having both centralized and decentralized exchanges at your disposal and keeping some of your assets in both.  The best decentralized exchanges are the ones that offer the ability to trade with the broadest range of crypto assets.  

Decentralized exchanges (DEXs) operate peer-to-peer using smart contracts, giving users control of their funds but often offering lower liquidity and slower transactions, while centralized ones work as intermediaries between parties.  Decentralized exchanges also offer more privacy than their counterparts.

Using Alerts and Notifications

A lot of the time, trading crypto is about making split-second decisions on which asset to buy and which to sell or hold.  Using sudden changes in the market to increase your profit requires crypto portfolio managers to be informed about them as soon as they happen.

Most crypto exchanges offer a set of alerts and notifications that activate based on the price of key assets.  The users can be notified via a variety of channels if the price of a certain asset drops or rises to a set amount or by a set percentage.  Most crypto trades could be made from mobile devices as soon as the trader is notified.

Staying on Top of Information

The value of a crypto asset portfolio changes based on market forces.  Sometimes, events that are not strictly related to the crypto trade can have a huge impact on it.  That’s why crypto traders also need to be on top of the reliable news sources that cover the industry.

Given how much crypto has grown in the last couple of years, this is becoming an increasingly difficult challenge. Investors should organize a media diet allowing them to follow reliable resources on the industry. It’s best to follow a few different media outlets and cross reference their predictions from time to time. 

Conclusion

Managing a crypto portfolio is a complex task requiring mid-term planning and a strategy unique to each investor. It starts with selecting the right exchanges and keeping track of the assets, using exchange tools. The exchanges also need to provide the security features that will protect both the assets and the users personal data.

A crypto portfolio should also be diversified across different exchanges and different coin assets. That way the risks involved in crypto investments are reduced,similarly to a stock portfolio. Crypto assets also change their price much more often than traditional assets, and keeping track of these changes via timely alerts and notification provided by the exchange is essential.