Crypto Portfolio Managementcryptocurrency diversification

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Cryptocurrency investing is one of the most exciting ways to grow your money, but it can also be risky if you don’t know what you’re doing. 

With prices going up and down quickly, it’s important to have a plan. This means understanding the different types of cryptocurrencies, spreading your investments wisely, and following best practices to reduce risk while aiming for good returns. In this section, we’ll break down how to build a smart crypto portfolio, focusing on how much to invest in Bitcoin (BTC), big altcoins (large-cap), and smaller altcoins (mid-to-low-cap).  We aim at providing you the foundational information to achieve competency in crypto portfolio management.

Bitcoin, Large-Cap Altcoins, and Mid-to-Low-Cap Altcoins

Creating a crypto portfolio is like building a puzzle—you need the right pieces in the right places to make it work. A good portfolio usually includes a mix of Bitcoin, large-cap altcoins, and smaller altcoins.  Here’s our guide to help you decide how to split your investments:

1. Bitcoin (BTC): The Safe Base (40-70%)

Bitcoin is the most well-known cryptocurrency and is often called “digital gold.” It’s less risky (although outperformed most over the long run – see intothecryptoverse.com) compared to other cryptos and is a good starting point for any portfolio.  We recommend putting 40-70% of your money into Bitcoin. Here’s how to decide:

  • If you’re a careful investor, go closer to 70% for more stability.

  • If you’re okay with some risk, aim for 40-60% to leave room for other investments.

2. Large-Cap Altcoins: Steady Growth (20-40%)

Large-cap altcoins are cryptocurrencies like Ethereum (ETH), Binance Coin (BNB), and Cardano (ADA).  These are well-established projects with strong teams and real-world uses. They’re riskier than Bitcoin but can still grow your money and unlikely to fail and cease to exist.  Generally these projects are in the top 20 crypto projects by market capitalisation. Allocate around 20-40% of your portfolio to these coins:

  • Pick 3-5 large-cap coins to spread your risk.

  • Focus on projects with strong communities and clear goals.

3. Mid-to-Low-Cap Altcoins: High Risk, High Reward (10-20%)

Mid-to-low-cap altcoins are smaller, newer projects (look at projects ranked in the top 1000 projects based on market capitalisation). They can grow a lot in value but are much riskier and can fail and cease to exist over time.  Only invest 10-20% of your portfolio in these, depending on how much risk you’re comfortable with:

  • If you’re a risk-taker, you can go up to 20%.

  • If you’re more careful, stick to 10% or less.

  • Always research these projects carefully before investing. Look for good technology and active teams – see our section on how to evaluate a crypto project.

Final Thoughts 

Cryptocurrency investing can be an exciting and rewarding journey, but it’s important to approach it with a clear plan and a focus on risk management. By building a well-balanced portfolio with a mix of Bitcoin, large-cap altcoins, and a smaller portion of mid-to-low-cap altcoins, you can position yourself for growth while minimizing potential losses.

Remember, the crypto market is highly volatile, so always invest only what you can afford to lose and avoid making emotional decisions based on short-term price swings. Stay informed, diversify wisely, and think long-term. Whether you’re a beginner or an experienced investor, following these best practices will help you navigate the crypto world with confidence and set you up for success in the ever-evolving digital asset space. 

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