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How To Keep Track of Your Cryptocurrency Portfolio

Sofia Peterson by Sofia Peterson
August 15, 2022
How To Keep Track of Your Cryptocurrency Portfolio
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Digital assets such as blockchain-enabled cryptocurrencies are the next big thing, and there is no denying the fact. The total market value of cryptocurrencies reached $2 trillion in August 2021 (double what it was in 2020). Experts project the global Digital Asset Management market size to grow from $4.2 Billion in 2022 to approximately $8 Billion in 2027. When first released in 2009, bitcoin cost $0. Today, bitcoin sells for more than $21,000. That doesn’t only portray a remarkable growth rate but also reflects how influential cryptocurrencies have become over the years.

Other than being digital, cryptocurrencies are similar to other commodities and assets. However, unlike other things, crypto has specific rotating features that can be challenging to track. Managing and monitoring your crypto portfolio is highly imperative. This article will emphasize a few ways to help you keep tabs on your crypto portfolio.

1.     Know your portfolio structure

Your portfolio structure matters a great deal when dealing with cryptocurrencies. To diversify your portfolio, you must learn how to manage it accordingly. Diversification can be exceptionally beneficial for your investments. However, handling a variegated portfolio can be challenging.

A portfolio consisting of only bitcoin will lead to highly volatile experiences. Therefore, balancing your portfolio with diversification is essential. Diversification prevents significant losses and helps retain the market’s most valued assets. Furthermore, it increases the chances of rebalancing and picking an outperformer. You can consider taking crypto training to expand your knowledge base. It will help you understand the portfolio structure of cryptocurrencies more in-depth and enhance your decision-making capabilities.

2.     Learn about cryptocurrencies

As mentioned previously, learning about cryptocurrencies is essential to building a strategic and robust portfolio. You must understand that cryptocurrencies are here to stay for good. The idea that the use of cryptocurrency will be restricted for around 100 years is untrue. Considering the speed at which cryptocurrencies are growing in numbers, you’ll realize how soon they will take over fiat currencies. Cryptocurrency started with one coin in 2009. Today, more than 19,000 cryptocurrencies with dozens of blockchain platforms exist.

Moreover, technology has become excessively strong that crypto mining takes place at an incredible pace. Bitcoin alone mines a block about every ten minutes using sufficient machinery. It portrays how simple creating cryptocurrencies has become. 

These facts clarify why learning and understanding cryptocurrency has become imperative for everyone. Another prime reason for learning about cryptocurrencies is their high security. Crypto offers simple investments and irreversible transactions, is free from political or third-party interferences, and carries an excellent future scope.

3.     Analyze a crypto token before adding it to your portfolio

Analyzing your portfolio before making any further investments is a critical step. Portfolio analysis helps steer clear of fraud, avoid scammers, and improve security. However, you must understand that scams often erupt unexpectedly; therefore, there is no set method for analyzing your crypto portfolio. But you can take a few preventive steps to help you explore your portfolio thoroughly.

Your first step must be to scrutinize the crypto token’s white paper. The white paper mentions the team’s aims for the project. It helps you decide whether goals are realistic and not lifted pages from another project. Next, assess the team behind the project. Go through their portfolio, see past projects, and ask for references. Then check out the project on social media, ascertain legality issues, find trusted people, and get abreast of the token’s project announcement.

4. Understand how you should keep track of your cryptocurrencies

Every crypto investor must have a solid strategy to keep track of their cryptocurrencies in case of unexpected occurrences. Separately keeping track of your crypto helps maintain a separate record of trades, holdings, and other relevant information. Depending on your country, it might be necessary for accounting and taxation purposes. Moreover, tracking provides an overview of your portfolio and simplifies fund management.

Several platforms and apps help you track your cryptocurrency portfolio. Some popular ones include:

•          CoinSmart

•          CoinTracker

•          Pionex

•          eToro

•          Bitstamp

•          Blockfolio

•          Coin Conclusion

Several options might confuse you in choosing one. To simplify your decision, look for specific features in each app before picking one. Ensure the tracking app offers integration with various financial institutions and a high level of security. Usability through automation and entire portfolio unification is also crucial.

5.     Know your cryptocurrency risks

Even though cryptocurrency is a remarkable innovation, the technology has some risks. Smurfing, money laundering, and romance scams top the list. A recent BBC report showed that crypto money laundering has increased by 30% since last year. Other crypto risks include blackmailing scams, fake crypto exchanges, crypto purchases on the black market, crypto pumps, and dumps. These are highly concerning factors for crypto users. Another study showed more than 46,000 people over $1 Billion in crypto scams.

However, you must understand that there are risks associated with every new concept and innovation. You must ensure to play safe and strategically. Understand your cryptocurrency risk and take all necessary precautions to avoid them. Knowing your cryptocurrency risk can help you build a more substantial portfolio and track it more effectively.

6.     Use the best crypto wallets

A crypto wallet is a program that allows you to store, send, and receive cryptocurrencies. You’ll find several crypto wallets online. The private key verifies transactions while the public key sends cryptocurrencies into a wallet. Crypto wallets usually consist of two pairs: a private key and a public key. However, you must ensure to invest in one that can offer you full features and benefits. Your crypto wallet must be easy to use and support daily transactions without hassle. It must be highly secure, allow instant transactions against geographies, and allow transactions across multiple cryptocurrencies.

Some trending crypto wallets include exodus, electrum, mycelium, Trezor Model T, and Ledger Nano X.

Finishing thoughts

Cryptocurrencies can be highly lucrative if you remain aware of market trends. Consistency and strategy help with trade significantly. However, caution is mandatory. Crypto investments aren’t always a win-win situation. If the market tumbles, you could face significant losses.

Therefore, keep tracking your crypto portfolio regularly. Check market trends and take immediate action if you witness a potential downfall in any of your asset’s value. Lastly, diversify as much as possible. The more cryptocurrencies you own, the less your chances of facing losses.

Sofia Peterson

Sofia Peterson

Sofia is a contributor at The Hack Post who loves to write about Technology. She also enjoys reading books and swims during her free time.

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