7 Tricks to Manage Your Crypto Portfolio in a Down Market

Cryptocurrency markets are quite erratic. So it's important to know how to position crypto portfolio in down market to minimize losses. Some of the approaches we employ to manage holdings may be useful to you if you want to manage or trade a portfolio on your own. The challenging part starts once you have assembled a manageable, complete, and diversified portfolio. You should make an effort to manage your positions carefully and with as little emotion as possible. Going against your instincts by cutting your losses quickly and letting your winners ride may play a significant role in enhancing the returns of your portfolio and protecting your wealth. We discussed the best strategies to employ in a down market.

How to Position Crypto Portfolio in Down Market - Best 7 Tricks

Whether you are a long-term investor or a short-term trader, there will be moments when your cryptocurrency portfolio is at risk. So how to position your crypto portfolio in a down market, will be the first thing that will come to your mind.

While doing portfolio tracking you find that the value of one or more of your assets is declining. You can find yourself in a precarious scenario that quickly turns intolerably frustrating. It could lead you to act on an impulsive choice rather than following a well-thought-out plan. The next ten steps will show you how to get out of precisely these difficult circumstances.

• ‍Patience is a Virtue

Most of the time, patience is a quality that brings rewards. If you found yourself in a losing trade after conducting a comprehensive study from all angles, there is a good probability that the present market downturn is only temporary. You can find yourself back in the growth if you give it some time. When you wait long enough, even the most difficult markets recover.

The cryptocurrency market, which is still developing, does not typically mirror the mood of other markets, such as the stock market. However, as most investors classify cryptocurrencies as a capital gain instrument, similar to equities, the crypto market may very well exhibit market behavior resembling that of other such assets.‍

• ‍Find Out The Reasons

There is a strong probability that your crypto asset is being devalued as a result of a basic fundamental issue. Perhaps the cryptocurrency is no longer supported by significant financial institutions, has fallen victim to fraud, or is out of money. As a result, it is unable to make technology investments. Just perform a name-only online search for the cryptocurrency and browse the most current search results under the "News" heading. You might need to reassess your position and possibly reduce losses if the fundamentals have deteriorated to the point that they are the cause of the value decline.

• ‍Start Hedging

Risk management in investments often involves hedging. To reduce the risk associated with your existing position or industry, you essentially go against it by hedging. For instance, if you purchased Bitcoin instead of another cryptocurrency like Ethereum and the price of Bitcoin is down, you can think about selling Bitcoin in a different trade to profit from the current downtrend.

When trading cryptocurrencies on brokerages that permit short selling, positional hedging is extremely helpful.

• ‍Exchange Crypto

You might decide that a specific cryptocurrency isn't worth keeping. In the cryptocurrency sector, you might have the opportunity to trade with a new, better cryptocurrency, as opposed to the stock market, where you are forced to accept losses. For instance, let's imagine you purchased a large quantity of cryptocurrency at a premium price, but its value has been declining with no sign of improvement. You learn about a brand-new, affordable cryptocurrency with a promising future at the same time. Even if you can't buy a lot of the new cryptocurrency with your depreciated token, you might still profit from cutting your losses and swapping for the superior cryptocurrency.

• ‍Consider cutting your losses

For a variety of reasons, including individual risk tolerance and market conditions, you may not always have a choice. In that scenario, you might want to think about just quitting, leaving your lost bet, and concentrating on another revenue stream.

Recall that stop-loss orders are more frequently used by short-term traders. The risk-management assessment for long-term investors is expected to be done in advance to ensure they have adequate time to wait things out.

If you bought a scam or phishing crypto and realized your error afterward, using a stop-loss may prove to be quite helpful because it allows you to limit your losses before the asset's value drops to zero.

• ‍Avoid Emotional Attachment to a Position

Although holding a position that lowers portfolio value is terrible, the mental suffering it brings about is even worse. After a defeat, try to take a few days off to focus on other things, like your family and personal well-being. Following that, you can plan out your next course of action, resulting in a superior trade.

Every trader makes bad bets occasionally; it's just the way the game is. It's essential to avoid being emotionally invested in a position. The two activities of trading and investing are fundamentally unlike.

• ‍Reevaluate Your Risk

The first thing you must do before investing in anything is determined your level of risk tolerance. But as time goes on, things alter in ways that can affect how risk-tolerant you are. When your portfolio is performing poorly, it may be a good idea to reevaluate your risk tolerance to decide what to do next. But ultimately, you should never act hastily because of your feelings or the perception that your risk tolerance is high or low. You may receive a surprise to the contrary by carefully assessing your tolerance.

What is a Crypto Portfolio?

A cryptocurrency portfolio is a tool to manage your online currency investments. You can use cryptocurrency management software. It helps you track each coin’s performance. This type of software provides you with different analytical tools.

Some platforms also broadcast live feeds and pricing updates from cryptocurrency exchanges. Some of them can alert you to significant market activities.

People are often curious about how many cryptocurrencies they should have in a portfolio. You can not find an obvious answer. It will depend on you as an investor. But if you want to optimize your risk-adjusted return, you should have at least 3–9 cryptocurrencies. You can lower your risk by dividing up your bets. Additionally, you'll be able to own some coins that haven't yet experienced the same level of popularity as bitcoin and ether. Before investing, you can specify a minimum coin market cap criteria.

You can use portfolio trackers. These trackers help investors to track their assets efficiently. You can manage your crypto assets in one place. Trackers can tell you about profits and losses from all your cryptocurrency investments. Users can also set up necessary notifications and view real-time market values.

Best Crypto Portfolio Example

Again, there is no one-size-fits-all approach to building a well-balanced and diversified crypto portfolio. Contrarily, each investor's portfolio will be structured differently based on their risk tolerance and long-term objectives.

Let's look into what a medium-risk crypto portfolio might look like with an investment capital of $15,000. 

50% Large caps

A cryptocurrency investor with a medium level of risk might decide to invest only 50% of their portfolio in large-cap coins. Except for stablecoins, only six crypto assets have a significant market capitalization.

The investor may choose to hold 50% of their large-cap cryptocurrency holdings in Bitcoin and distribute the remaining 50% among the remaining five tokens.

Given that the total investment is $15,000 and that 50% of the investment is in large-cap projects, this portion of the portfolio would look like this:

• Bitcoin - $3750
• Ethereum - $750
• BNB - $750
• Cardano - $750
• XRP - $750
• Solana - $750

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30% Mid Cap

The investor decides to spend $4500 of the $15,000 funds, or 30%, on medium-cap projects.

The buyer may decide to purchase a broad selection of cryptocurrencies from different markets and specialized areas. In this illustration, let's assume the investor chooses five different mid-caps for $900 each.

• Dogecoin - $900 
• Polkadot - $900
• Polygon - $900
• TRON - $900
• Shiba Inu - $900

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20% Small Cap

The remaining 20% or $3,000 of the portfolio will be allocated to small-cap projects. 

In this example, the investor opts for eight small caps at $375 each. 

An example of this might look like the following: 

• Tamadoge - $375
• Battle Infinity - $375
• DeFi Coin - $375
• Lucky Block - $375
• Compound - $375
• Waves - $375
• Nexo - $375
• The Graph - $375

Well-Balanced Crypto Profile - A Proven Crypto Positioning Strategy

A well-organized workstation can help you make better use of your time. The same holds for crypto profiles. A tried-and-true cryptocurrency investment strategy is to have a well-rounded crypto profile. But what is it exactly?

A cryptocurrency portfolio that includes a variety of coins with various use cases and risk profiles is said to be well-balanced. When buying new cryptocurrencies or liquidating holdings, the investor assigns a specific sum of money to each coin and rebalances it as needed.

A well-balanced cryptocurrency portfolio must maintain an equilibrium between your crypto holdings and your overall investment portfolio. Cryptocurrency should only represent a small fraction of your overall portfolio because it is a high-risk investment. A decent rule of thumb is to keep your allocation to cryptocurrencies to no more than 5%–10% of your total portfolio.

You might need to sell some of your cryptocurrency holdings if their value rises to keep your portfolio from becoming overly crypto-centric. If there is a market downturn, having 25% or 50% bitcoin holdings puts you in great danger.

Effectively Position Your Crypto Portfolio in A Down Market

Even in a bear market, there are no reliable strategies that will guarantee your profit. But if you know how to position crypto portfolio in down market you can control you losses. However, you can utilize these simple strategies to cut your losses as much as you can.

‍Dollar-Cost Averaging (DCA)

In the Dollar-Cost-Averaging (DCA) investment method, your investment is split into a predetermined number of recurring investments. The objective is to lessen the effect that volatility has on your entire investment. Given that DCA is a long-term investing strategy, the lessened effects of volatility and price averaging enable your cryptocurrency portfolio to expand more favorably and sustainably over a longer time horizon.

For instance, you have $1,000 to invest in Bitcoin, but the market is very volatile. Here, you can divide the money into five equal payments of $200 each, and on a set date each month for the next five months, invest each payment in Bitcoin. When the market is down, investing in DCA may be a wise choice. By doing this, you can end up spending less than you might have five months ago when the market was optimistic.

‍Diversify Your Portfolio

Diversification is a key component of a successful cryptocurrency investment strategy. Two highly volatile and uncorrelated crypto assets can be eased out by one another, resulting in good risk-adjusted returns. The bad news is that there is a lot of correlation between cryptocurrencies. Consequently, even though diversifying your cryptocurrency portfolio can be difficult, it is still doable. So, select the best crypto portfolio tracker wisely. Read up on the fundamentals of a cryptocurrency's native token to conduct research. Sometimes, the token's current price does not accurately reflect the value it adds to the crypto ecosystem.

‍Rebalance Your Portfolio

One of the most important parts of managing a crypto portfolio is rebalancing. You'll probably need to buy and sell a few cryptocurrency investments to maintain the balance of your portfolio when prices change. For instance, you might have to exchange some of your smaller investments for bigger cryptocurrencies to preserve your preferred asset allocation.

‍Plan an Exit Strategy

Every good plan must have a backup plan. When our trades are profitable, we feel good about the choices we made.

Without a plan for departing, that motivating feeling will push us to continue working, creating a feedback cycle. In the event that the market does crash, a rebound is expected. The price of cryptocurrencies would increase once more in an ideal world. However, the worst-case scenario is that the correction keeps getting worse.

Before entering a deal, a skilled trader will consider their exit strategy. The price at which they will conclude the deal for a profit and the price at which they will close it for a loss is made plain in this manner. Once more, follow your plan.

4 Benefits of A Crypto Portfolio Tracker

A portfolio tracker allows you to track the total number and value of your cryptocurrencies. You can follow in real-time across all wallets, exchanges, platforms, and blockchains. You can also check previous transactions, their value, and their starting or ending points using these programs.

• One of the primary features of a bitcoin portfolio tracker is its capacity to aggregate all of your scattered information in one place. Checking will be easy for you as a result. Trackers make your financial data easier to understand, which does this. You'll be better able to establish and sustain informed financial goals as a result.
• Each coin's worth changes every minute of every day, frequently substantially. If you have many coins to track, good luck traversing a myriad of various cryptocurrency exchanges. Before making a large trade, a trustworthy tracker can help you rapidly get a comprehensive picture of the value of all your different crypto coins.
• The relative young of the market is one factor contributing to the volatility of crypto assets. These volatile fluctuations as well as other sector shifts may create opportunities for investors who are eager to act. However, if your view of your purchasing power is unreliable, you will be unable to accomplish that. You can easily acquire that kind of insight with a thorough bitcoin portfolio tracker.
• Investors often adhere to the idea of diversification. When markets have their regular ups and downs, well-diversified portfolios are typically insulated from large losses and typically produce higher returns than poorly diversified portfolios.

Best Crypto Portfolio Tracker - Things to Look For

Picking the best crypto portfolio tracker is one of the most effective cryptocurrency investment strategies. It will require much analysis. Because everyone has distinct goals, preferences, and needs. There is no assurance that a particular tracker will perform as well for you as it does for your friend. That's why evaluating your crypto portfolio performance is important. We compiled all the information in one spot to help you with your quest.

• The decentralized nature of the blockchain makes it extremely challenging to detect and trace Bitcoin and other cryptocurrencies. It's also quite tough to tell whose wallet is whose. It's nearly impossible to reverse a bitcoin transaction after it's been started. This highlights the need to select a tracker that prioritizes security more than others. Make sure your wallet has security measures like two-factor authentication and multi-layer encryption because even a small attack or data leak can leave it exposed.
• Having a portfolio allows you to instantly access all of your assets and track changes in the portfolio's value. The overall worth of your portfolio is displayed on the first page of a good portfolio tracker, or after one or two clicks. Additionally, select one of the crypto portfolio tracker apps on your phone if you want this to be accessible on your phone without the need to open a web browser and log in.
• Your tracker must be easy to use and comprehend. Finding the value of each coin in your collection shouldn't be difficult. Find a tracker that you like using and that has a clear, appealing layout. By doing this, utilizing your portfolio tracker will be quicker, less stressful, and easier on your eyes.
• A cryptocurrency portfolio tracker ought to house all of your assets in one place. Find a portfolio tracker for cryptocurrencies that can link to all the coins and exchanges you use.
• If you're looking for a tracker and exchange, check out the platform's coin selection before you create an account. By doing this, you will be able to trade all the coins you desire without having to use numerous exchanges or remember passwords.

How to Position Crypto Portfolio in Down Market - Mistakes to Avoid

Making mistakes is perfectly alright, even though they can result in losses. What is not acceptable is failing to learn from mistakes. Subsequently, avoid these mistakes to position the crypto portfolio in a down market. We will now go over the most common portfolio errors and how to avoid them.

Investing impulsively

Because of a suggestion or a social media post, many novice investors are quick to buy a coin when they find something they like. However, the sooner you decided to invest, the more likely it is that you will later regret it if something goes wrong. The ideal long-term investment strategy is dollar-cost averaging, which entails buying a little amount of a coin at regular periods (for example, once per month) regardless of the price. By doing this, you are less likely to be affected by short-term swings and to be “shaken out” of your investment if the price drops.

Lack of investment tracking

You should keep track of your investments unless you only have one coin in one location. You can keep track of your investments using a variety of cryptocurrency portfolio management programs and mobile applications. But it is wise to use trackers that have options to track multiple coins.

Control Expectations and Plan Your Exit

Even if you follow our other advice and get the first two right, you could still make a mistake by failing to consider when you want to take profits or cut losses. You must understand the following for any trade or investment:

• Your reasons for investment
• When you want to make a profit
• When you wish to cut losses
• Any additional data that can alter your investment basics

On days when there are significant gains or losses, you can lessen the likelihood of making rash actions by properly regulating your expectations.

FAQ

What is Down Market?

Down market simply refers to “market is down” or “market is off”. If we say elaborately, it means a given market closes lower than the day before.

Is Down Market And Bear Market the Same?

Technically somewhat yes. A widespread decrease in asset prices of at least 20% from recent highs is referred to be a bear market. A bear market is also known as a down market. However, it won't be considered a bear market if the price loss is less than 20%. But you could describe it as a down market.

What is Crypto Portfolio Allocation?

Crypto portfolio allocation means the allotment of different assets to your crypto portfolio. Investors can prevent overexposure to a few coins by maintaining a diversified portfolio of cryptocurrencies. This means that other coins in the diverse portfolio may be able to assist cover the losses if one project doesn't quite perform as well as anticipated.

As a result, the main goal of crypto portfolio allocation is to distribute risk among numerous projects. Investors must make sure their portfolio includes investments in reputable, large-cap cryptocurrencies.

How Long Should You Hold Your Crypto?

The general rule of thumb is to hold for at least five years. But the cryptocurrency market is completely different and considerably more volatile. Thus, conventional guidelines don't always work. When the price of your cryptocurrency has doubled or tripled since you purchased it, you can sell it. You shouldn't hold it for very long if you don't believe in long-term investing.

How Many Cryptos Should You Hold in Your Portfolio?

The majority of experts concur that you shouldn't invest more than 5% of your wealth in cryptocurrency. This sum is both modest enough to keep a shareholder calm during times of high volatility and substantial enough to make a real difference to the portfolio should cryptocurrency prices surge. Experts occasionally permit allocations of up to 20%. However, your risk appetite and cryptocurrency beliefs ultimately determine how much cryptocurrency should be in your portfolio.

Why UnBlinked?

Trading cryptocurrencies is a high-risk practice that frequently involves buying and selling them. Anyone interested in trading cryptocurrency should be knowledgeable about the different exchanges.

You should also stay current with your preferred coin. We advise using a single platform that gives users access to all currency-related data as a result. It's much easier than frequently searching Google for updates. All cryptocurrency data, including that from Defi, DEX, and even CEX, is compiled by UnBlinked. We get everything ready for you. It can also be used to track your cryptocurrency portfolio. You will receive daily, monthly, and yearly revenue reports from it. Utilize UnBlinked's bitcoin portfolio tool to keep track of all your previous transactions and balances.