How to Construct a Crypto Portfolio

On this episode of The Wiser Crypto Investor Podcast, Casey Smith and Robert Swarthout talk about how to construct a crypto portfolio. They also touch on a passive approach to investing in crypto.

Listen or Watch:

SUMMARY:

How to Construct a Crypto Portfolio

When building an investment portfolio, there is a lot to consider. It is no different when building a crypto portfolio. Crypto is still very new, which means there are different scenarios happening every day that we need to work around and adapt to. Currently, crypto is going through its first recession, and with this, we’ve recently learned that BitCoin is not an inflation hedge.

You can try and diversify your crypto portfolio by separating it into different sections, but can be a challenge and you have to stay up to date with everything going on. You think about investing in crypto passively. Maybe look at the top five cryptos (minus the Stablecoins), invest, and forget. Let it sit just like you would if you were investing in your 401k.

How do You Break Down Different Segments?

Some of the most recognizable cryptocurrencies are actually meme coins. You may recognize Doge Coin, Sheba Coin, and other entertainment type meme tokens. In reality, these types of coins don’t hold much utility, and most people who take crypto currency seriously don’t even look at meme coins. Crypto is risky enough, and you shouldn’t base your crypto investments off of what people are tweeting.

There are also layer one tokens like Bitcoin, Ethereum, and XRP. These are larger tokens that hold a lot of the market. If you look at the market cap weighted rankings biggest to smallest, you can think of that as a risk chart. The further you go down the list, the risker they are. With this logic, it makes Bitcoin the safest coin, which could be true because one, it has been around the longest and two, it is the only coin with regulatory clarity. Ultimately, investing in crypto is risky. With this in mind, be smart about any crypto you buy.

Taking the Simple Approach

A good approach for investing in crypto is to be a passive investor. You can do this by putting an equally weighted amount in a few different coins, the best being the top five. The top five coins (minus Stablecoins) are Bitcoin, Ethereum, BNB, XRP, and Cardano. When looking to buy new crypto assets, try to buy when they are on a down trend. If it’s green don’t buy. Along with this, do research on the crypto before you buy.

Passive investing takes most of the emotion out of it. Currently, there is a lot of emotion occurring in the world of crypto because it is still new. Since crypto is still so new, there is no guarantee the money you put in will be worth anything in the future. With this in mind, never put money in that you will need within the next few years.

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TIMESTAMPS:

0:00 Intro

0:25 How to Construct a Crypto Portfolio

4:00 How do You Break Down Different Segments?

9:30 Taking the Simple Approach

LINKS:

Learn more about Casey Smith and connect with him on Twitter.

Learn more about Robert Swarthout.

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By Published On: October 24, 2022

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