Creating a Balanced Cryptocurrency Investment Portfolio

Why build a “balanced” investment portfolio?

In the crypto market, the volatility of a single asset is extremely high, and any sudden event can trigger dramatic price changes. A balanced investment portfolio can share gains during uptrends and reduce losses during downtrends.

This is the core logic of “Asset Allocation”: don’t put all your eggs in one basket.

Common imbalanced situations in the crypto market include:

• Full position in BTC or a single popular token
• Neglecting stablecoin and liquidity positions
• Ignoring cyclical differences between different sectors (public chains, DeFi, AI, gaming, etc.)

Professional investors typically:
Simultaneously allocate mainstream coins + growth projects + stablecoins + risk hedging assets, to maintain flexible response capabilities in different market stages.

Three-tier structure of investment portfolio

A high-quality crypto portfolio usually contains three levels: Core, Growth, and Speculative.

1. Core Layer

• Recommended proportion: 50% - 70%
• Goal: Long-term stable growth
• Typical assets: BTC, ETH, USDT, and other highly liquid mainstream assets
• Characteristics: Low volatility, low risk, high capital safety
• Strategy: Regular investment, holding, low-frequency operations

2. Growth Layer

• Recommended proportion: 20% - 40%
• Goal: Capture industry growth dividends
• Typical assets: Mid-sized tokens with clear product roadmaps and communities, such as SOL, AVAX, OP, LINK
• Characteristics: Medium risk and return, requires continuous tracking of project fundamentals
• Strategy: Medium-term holding, trend following

3. Speculative Layer

• Recommended proportion: Within 10%
• Goal: Seek high-risk, high-return opportunities
• Typical assets: New coins, meme coins, small-cap innovative projects
• Characteristics: Extremely high volatility, high short-term risk
• Strategy: Short-term trading, strict stop-loss

Visual example: Three-tier structure pyramid

Asset allocation approach: Diversified but not fragmented

The key to building a portfolio is “correlation management”. Even if multiple assets are allocated, if they are in the same sector or affected by the same events (e.g., all public chain tokens), they may still experience “rising together, falling together” scenarios.

Dimension One: Asset Types

• Mainstream coins (BTC, ETH): Provide value anchoring and long-term stability
• Public chains & Layer 2: Capture ecosystem growth
• Application sectors (DeFi, GameFi, AI): Share innovation dividends
• Stablecoins: Provide defense and liquidity

Dimension Two: Investment Timeframe

• Short-term positions: Capture market momentum and swing opportunities
• Medium-term positions: Follow fundamental growth
• Long-term positions: Hold core value assets

Dimension Three: Risk Exposure

• Maintain 20%-30% stablecoin reserves
• Single token position not exceeding 20%
• Define stop-loss point and expected return before each position entry

Dynamic Rebalancing

Market fluctuations will change portfolio weights.

For example: If you initially allocate 50% BTC, 30% ETH, 20% SOL, and ETH rises 80% in a bull market, its proportion in the portfolio might increase to 45%.

At this point, your risk structure has passively changed.

Solution: Periodic rebalancing.

Implementation methods:

• Periodic adjustment: Check weights monthly / quarterly
• Threshold adjustment: Adjust when an asset deviates ±10% from original weight
• Automated strategy: Use investment robots or grid strategies for dynamic balance

The goal of rebalancing is not to “chase highs and sell lows”, but to maintain stable risk, ensuring your investment plan always aligns with your risk tolerance.

Investment portfolio examples for different risk preferences

Cyclical Strategies

Market cycles can be divided into four phases:

1. Accumulation: Market sentiment is low, prices are in bottom areas.
   Strategy: Regularly invest in mainstream coins in batches

2. Markup: Trend established, capital inflow.
   Strategy: Increase growth positions

3. Distribution: Price fluctuates at high levels.
   Strategy: Gradually reduce positions, preserve profits

4. Markdown: Capital outflow, market correction.
   Strategy: Retain stablecoins and defensive assets

Market cycle rotation and position change diagram

Practical Case: Building Your First Crypto Investment Portfolio

Assume you have 10,000 USDT, with a “balanced” risk preference, aiming for an annualized return of 10% within three years.

The following is only an example, not financial investment advice. If you want to implement it, please proceed cautiously according to your financial capacity, DYOR, and choose cryptocurrencies suitable for you.

1. Initial Configuration

• BTC 40% → 4,000 USDT
• ETH 20% → 2,000 USDT
• SOL + LINK (Growth layer) 20% → 2,000 USDT
• New projects (Speculative layer) 10% → 1,000 USDT
• USDT (Liquid funds) 10% → 1,000 USDT

2. Operating Principles

• Review quarterly, adjust holdings based on market trends
• Single investment not exceeding 10% of total funds
• Write trading logs for each operation (reasons for buying, emotional state, exit conditions)

3. Risk Control

• Set 10%-15% stop-loss line for each position
• Temporarily increase stablecoin holdings if market corrects significantly
• Exit promptly if project loses fundamental support

Summary and Review

Creating a balanced crypto investment portfolio is not about “predicting the market”, but about managing risk, controlling emotions, and maintaining structural balance.

• Core layer: Stable growth
• Growth layer: Capture dividends
• Speculative layer: Control risk
• Stablecoins: Maintain liquidity and safety margin

In the long run, structure and discipline are more important than prediction. Truly excellent investors don’t always buy at the lowest and sell at the highest, but always ensure their portfolio “survives longer”.

Supplement: Technical Analysis Course Glossary