Many people who invest in cryptocurrencies prefer to diversify their investments so as to spread their capital and manage risks more effectively. This is a solid strategy, as some assets may be more profitable than others, and investors do not have all their eggs in a single basket.
Diversifying your crypto portfolio to reduce risk and increase profitability is great; however, one thing more important than diversifying a crypto portfolio is effectively tracking it so that you, as an investor, can manage your assets in a timely fashion, avoid mistakes, balance your portfolio, and avoid huge losses.
With multiple blockchain networks, hundreds of exchanges, and several thousand cryptocurrencies, there is no limit to how you can invest crypto assets. You could have assets scattered within dozens of custodial and non-custodial wallets, depending on the assets you have invested in.
Of course, flipping through several exchanges and wallets may be quite herculean and maybe impossible, so you need a concise way to keep track of your investments, and that’s what this article discusses.
In this article, we’ll outline methods for managing large crypto portfolios in such a way that keeps an eye on all without missing crucial opportunities in the market. Let’s dive in!
What Is A Crypto Portfolio and How Is It Managed?
A crypto portfolio is a collection of cryptocurrencies owned by an investor. It typically consists of several altcoins and stablecoins.
However, as you probably already know, it is not sufficient to invest in a couple of cryptocurrencies and just leave it. It is important to actively manage your investments, analyzing which ones you should take profits on, cut losses on, and generally make the best decisions to meet your investment goals.
It is not unusual for traders and investors to get carried away by their emotions when trading and investing, which can significantly sabotage their efforts. Even experienced investors could neglect their assets or get caught up in the hype and just make investment decisions without considering their long-term goals.
However, with proper crypto portfolio management, you can control your emotions, stay updated with the performance of your assets, and make informed decisions.
How To Manage Your Portfolio and Track Your Investments
As mentioned earlier, the best way to manage a portfolio is through the ability to see everything at a glance.
Some investors do the hard work of creating a spreadsheet containing the asset, the dollar value invested, the unit price of the asset, and the date. However, with technological advancements, this has become obsolete, as the process is time-consuming and could lead to errors. As a result, using crypto portfolio trackers has become the new norm.
A crypto portfolio tracker is a tool or platform that allows individuals to monitor and manage their cryptocurrency investments in one centralized location. The main purpose of a crypto portfolio tracker is to provide users with a comprehensive overview of their holdings, including the current value, performance, and allocation of their various cryptocurrency assets.
Typically, a crypto portfolio tracker will contain the following components:
- Asset allocation to see the breakdown of all cryptocurrencies invested in, in terms of percentages
- Real-time price tracking to display the current market value of assets
- Alerts to notify users of significant price changes that can affect investment decisions
- Performance analysis to see the overall performance of individual assets across the board.
Depending on the crypto portfolio tool used, there could be a few additional features that make portfolio management easier.
How Does A Crypto Portfolio Tracking Tool Work?
A crypto portfolio tool works in quite a simple manner.
Typically, cryptocurrencies are listed on different exchanges, so ideally, the coin you want to invest in may not be available on your favorite exchange, so you may need to invest using several exchanges and wallets.
So, assuming you bought Coin A via Binance and left it in Binance Wallet, Coin B in Coinbase wallet, three other coins bought via Ethereum-based DEXes on Metamask, two BSC network coins on Trust wallet, another three coins on the Solana-based DEXes on Phantom Wallet, etc.
That’s a total of about 10 coins on about 4 blockchain networks scattered across 5 crypto wallets. Traditionally, if you wanted to keep track of each one, you’d need to open each app to monitor the price movements before making decisions.
However, with a crypto portfolio, you can trigger an API integration or connection from all wallets, such that you can see all assets from all five wallets at once without switching apps.
Crypto portfolio tools also offer the advantage of providing analytics to aid investment decisions.
What To Look Out For When Selecting an Ideal Crypto Portfolio Tool For Your Investments
Beyond the four components listed earlier in this article, the ideal portfolio tracker should:
- Easily Integrate With Multiple Custodial and Noncustodial Wallets: Since crypto assets are often scattered across various exchanges and wallets, the ideal portfolio tracker should support integration with a high number of platforms, even beyond the popular ones, so that you can view your entire portfolio in one place.
The entire idea of using a crypto portfolio tool is to aggregate everything so that you can view it at a glance; if that isn’t possible, then it may not be optimal.
- User-Friendly Interface: The ideal platform should have an intuitive and user-friendly interface, ensuring you can navigate the platform effortlessly.
This is especially important for beginners or users not well-versed with advanced features or terminologies.
- Security Measures: Using a crypto portfolio tool means that you are entrusting your financial data to a third party. Hence, it is important to use a portfolio tracker with proven, robust security features.
Despite connecting your asset via API integration, it is important that the ideal platform employs data encryption to ensure that your information isn’t available to the public.
- Customization Options: Every investor has unique preferences. A good tracker should allow customization, enabling you to organize and visualize your portfolio data in a way that suits your individual requirements.
Currently, there are over a dozen crypto portfolio trackers that are well-adopted by users within the industry; some of them include Coinmarketcap, CoinGecko, CoinLedger, Delta, BlockFolio, etc.
Indeed, portfolio diversification is one fool-proof strategy to manage investments effectively. However, managing a diverse crypto portfolio effectively requires a strategic blend of vigilance, analysis, and the right tools.
While manual management may have its nostalgic charm, embracing the efficiency of a sophisticated portfolio tracker is the key to staying ahead in the dynamic world of cryptocurrency investments. By selecting a tracker with the right features, you can confidently navigate the complexities of the market, ensuring that your investments align with your financial goals.
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