A Strategic Cryptocurrency Portfolio - The 70% Core / 30% Play Money Approach

in #cryptocurrencies7 years ago (edited)

Almost three years ago, on the 26th of June 2014 to be exact, my adventures in the world of cryptocurrencies had officially started by buying €50 worth of BTC. One month later I would own about 5 BTC and things started to get more serious.

Of course, everybody has their own approach depending on personal preferences, willingness to take financial risks, time able to invest and do research, ability to still sleep, etc. By now I have a system for investing in cryptos that suits my personal needs. I want to share it with you and am very curious about your approach to building your portfolio.

The 70% Core / 30% Play Money Approach

The basic philosophy behind my crypto portfolio is simple: a 70% ‘Core’ (long-term) segment and a 30% ‘Play Money’ (short-term) segment.

The ‘Core’ segment

Having this set of cryptos enables me to reap the benefits from a growing cryptocurrencies market without losing sleep over volatility. This segment holds projects that are based on different platforms and are focused on different problems or opportunities to create diversification.

  • Investment period: Long-term (3+ months).
  • Total value rule: Must be at least 70% of the total value of the portfolio.
  • Number of cryptos rule: Maximum of 10 different cryptos at any given point in time.
  • Rebalancing rule: Redefine ideal relative positions of holdings every four weeks and redistribute accordingly.

Other Core segment rules:

  • Know as much as you can about these cryptos (team, community, primary focus, tech, roadmap, most important competitors, funding, business model).
  • Make sure to keep yourself educated about recent and near future developments of these cryptos.
  • When redistributing, ignore small deviations from ideal distribution to avoid unnecessary transaction costs.

The ‘Play Money’ segment

Having this segment in my portfolio allows me to enjoy the excitement of finding cryptos that might have the potential to outperform the Core segment at least in the short term. It allows for speculation but simultaneously prevents unlimited Fear-Of-Missing-Out (FOMO) buying behavior.

  • Investment period: Short-term (a few days up to 3 months).
  • Total value rule: Can be maximum 30% of the total value of the portfolio.
  • Number of cryptos rule: Maximum of 10 different cryptos at any given time.

Other Play Money segment rules:

  • When adding a new crypto to this segment, the investment should at least be €200. This is to make sure that the potential profit is worthwhile the time invested in research.
  • When making an investment, set a date at which you will evaluate whether to keep the crypto in your portfolio or sell. When the decision is to hold, set a new date to evaluate again.
  • When stepping out of a crypto, sell the full amount of coins you own. Use most of the money to strengthen the Core segment and use the rest for future Play Money investments.

To minimize discussion on technical details of specific cryptos, I have decided not to include the specifics of the ideal coin distribution within my Core portfolio. I will do this in a subsequent post and will regularly give updates on that :-)

So for now, who would like to share their approach or thoughts?


* Follow me for regular updates on my cryptocurrency portfolio, recent crypto purchases, crypto research or just some Dice Challenges to train your brain ;-)


Disclaimer: I am not a financial advisor, trader or developer. I am just a crypto/blockchain enthusiast. Please do your own research, draw your own conclusions and do not invest any money that you cannot afford to lose.

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Exceptional Post!

One question, could you explain how do you decide to step out of a crypto?

I am waiting for your subsequent post!!!
Upvoted, resteemit and following you!!!

(Thanks for doing the same for me)

Will follow! You've written some interesting stuff as well I see.

To answer you question: Basically with every coin I buy, I buy it for a reason. There is something (or multiple things) that make me think the coin is going to outperform my core segment and shows potential. I also try to determine the moment in the future I should be able to prove myself right or wrong. Then I pick that date as the moment when I evaluate whether I should keep a coin or not. Usually I draw my conclusions from roadmaps, announcements, rumors, Slack channels etc. But my decision can also be based on signals of very active development. So when do I step out? When a coin does not meet my expectations at the evaluation date :-)

Btw, there is already a subsequent post, the first of a series of updates on my crypto portfolio ;-) Check it out here!

Thanks! So, in case you are not recovering the investment, do you step out from that coin as well?

Good one, should have added that to my reply ;-)

At the evaluation moment I will look at the coins future again and go through the same decision making process as before. I decide to keep it when I think it will outperform my core segment. For instance, sometimes some functionalities have a delayed release. My evaluation moment was around the initial release timing, but since it has been moved I force myself to think about it again. In the end I don't look at whether I need to sell for less or more than my initial investment. Sunk costs...

This is an EXCELLENT approach to investing!! Thanks for sharing it. You can save so many people a lot of heartache and losses and help them make a lot of money by following the discipline you outlined here! Great work. What you said about making sure not to miss the inevitable rise in cryptocurrency is such an important and timely point for this moment in history. We are on the verge of an explosion in the blockchain markets. $88billion for all of cryptos in the world?!?!?!?! That is absolutely insane! This technology is about to transform every industry in the world and it's all for sale now for a mere $88billion. UNBELIEVABLE! The point is, this market is heading to $1trillion soon and you want to make SURE you don't miss that ride. I love your approach and am sure I will implement portions of it. Thanks

Thank you for your kind words. Today I actually posted an updated version of my approach. You can find it here: https://steemit.com/cryptocurrency/@cryptotem/a-strategic-cryptocurrency-portfolio-the-70-core-30-play-money-approach-updated-v1-1

Awesome post

This is a really great post and deserves more attention!

Thanks :-) Hope you find it useful.

Thanks for this!

Thanks @tylergreen! Which part is most interesting to you?

Defo the play money section. Putting in a min of €200 into a currency to make profits worth the time - this sounds like good advice! Once my portfolio grows a bit I'll certainly try this out

Glad to hear! Good luck :-)

Thanks, cryptotem! I have a ton to learn about cryptocurrency and financial investment strategies. Oh and Dice challenges!

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