A crypto portfolio is considered balanced when the risk-return ratio of the included instruments suits an investor. Each trader may have their own risk tolerance and expected profit size.
All cryptocurrency portfolios, like traditional ones, can be divided into 3 main types:
This type of portfolio is primarily aimed at capital preservation while allowing for moderately high profits. It includes crypto assets with low-risk levels, such as well-known tokens with high capitalization (Bitcoin, Ethereum, Cardano, etc.).
This portfolio includes fast-growing cryptocurrencies, typically meme tokens (Shiba Inu, Catecoin, Duckie Land, etc.) or native coins of blockchain platforms related to gaming and social themes (Hive, Steem, Aave, etc.). Such assets are quite risky but can experience sharp price increases and yield very high returns.
This type of portfolio combines both reliable and risky digital assets. As a result, it has a moderate level of risk, and the overall capital growth with this investment approach is also moderate.
To create a balanced portfolio, you should first determine your investment goal and the level of acceptable risk. Most investors prefer the middle ground, opting for a moderate type of crypto portfolio that involves diversification, i.e. distributing funds among assets. Such a tactic significantly reduces risks, which is considered the main quality of a balanced portfolio. At the same time, an aggressive portfolio type is considered the most unbalanced, as this type of investment can bring both significant profits and huge losses.