Crypto Allocation Strategy

Crypto Allocation Strategy

Once you’ve decided on the Crypto Projects you want to invest in, the next step to think about is your Crypto Allocation Strategy.  One very popular strategy that Crypto Renegade recommends is Market Cap Weighting with max allocation limits.  The best way to explain this strategy is to show a few examples that give you the basic idea and then you can create your own.  Portfolio allocation strategies like this help to reduce risk by minimizing over-exposure to any one project.

You can find all the Crypto Market Cap data that you need at CoinMarketCap

2 Coin Portfolio – 60% Max Allocation

  • Coin 1 Market Cap = $125,000,000,000
  • Coin 2 Market Cap = $1,500,000,000
  • Market Cap Sum = $126,500,000,000
  • Coin 1 Total Percentage = 125,000,000,000 / 126,500,000,000 = 0.988 = 98.8%
  • Coin 2 Total Percentage = 1,500,000,000 / 126,500,000,000 = 0.012 = 1.2%
  • Coin 1 Portfolio Allocation = 98.8% > 60% Max Allocation -> 60%
  • Coin 2 Portfolio Allocation = 100% – 60% = 40%

3 Coin Portfolio – 40% Max Allocation

  • Coin 1 Market Cap = $125,000,000,000
  • Coin 2 Market Cap = $30,000,000,000
  • Coin 3 Market Cap = $1,500,000,000
  • Market Cap Sum = $156,500,000,000
  • Coin 1 Total Percentage = 125,000,000,000 / 156,500,000,000 = 0.799 = 79.9%
  • Coin 2 Total Percentage = 30,000,000,000 / 156,500,000,000 = 0.192 = 19.2%
  • Coin 3 Total Percentage = 1,500,000,000/ 156,500,000,000 = 0.009 = 0.9%
  • Coin 1 Portfolio Allocation = 79.9% > 40% Max Allocation -> 40%
  • Coin 2 Portfolio Allocation = 40%
    • 100% – 40% = 60%
    • Sum of remaining percentages = 19.2 + 0.9 = 20.1
    • Coin 2 Percentage of remaining coins = 19.2 / 20.1 = 0.955 = 95.5%
    • 60% * 95.5% = 0.6 * 0.955 = 0.573 = 57.3%
    • 57.3% > 40% Max Allocation -> 40%
  • Coin 3 Portfolio Allocation = 100% – 40% – 40% = 20% 

Crypto Portfolio Allocation

4 Coin Portfolio – 30% Max Allocation

  • Coin 1 Market Cap = $125,000,000,000
  • Coin 2 Market Cap = $30,000,000,000
  • Coin 3 Market Cap = $12,000,000,000
  • Coin 4 Market Cap = $1,500,000,000
  • Market Cap Sum = $168,500,000,000
  • Coin 1 Total Percentage = 125,000,000,000 / 168,500,000,000 = 0.742 = 74.2%
  • Coin 2 Total Percentage = 30,000,000,000 / 168,500,000,000 = 0.178 = 17.8%
  • Coin 3 Total Percentage = 12,000,000,000 / 168,500,000,000 = 0.071 = 7.1%
  • Coin 4 Total Percentage = 1,500,000,000/ 168,500,000,000 = 0.009 = 0.9%
  • Coin 1 Portfolio Allocation = 74.2% > 30% Max Allocation -> 30%
  • Coin 2 Portfolio Allocation = 30%
    • 100% – 30% = 70%
    • Sum of remaining percentages = 17.8 + 7.1 + 0.9 = 25.8
    • Coin 2 Percentage of remaining coins = 17.8 / 25.8 = 0.689 = 68.9%
    • 70% * 68.9% = 0.7 * 0.68.9 = 0.482 = 48.2%
    • 48.2% > 30% Max Allocation -> 30%
  • Coin 3 Portfolio Allocation = 30%
    • 100% – 30% – 30% = 40%
    • Sum of remaining percentages = 7.1 + 0.9 = 8
    • Coin 3 Percentage of remaining coins = 7.1 / 8 = 0.888 = 88.8%
    • 40% * 88.8% = 0.4 * 0.888 = 0.355 = 35.5%
    • 35.5% > 30% Max Allocation -> 30%
  • Coin 4 Portfolio Allocation = 100% – 30% – 30% – 30% = 10%

6+ Coin Portfolio – 20% Max Allocation

  • Coin 1 Market Cap = $125,000,000,000
  • Coin 2 Market Cap = $30,000,000,000
  • Coin 3 Market Cap = $12,000,000,000
  • Coin 4 Market Cap = $8,000,000,000
  • Coin 5 Market Cap = $1,500,000,000
  • Coin 6 Market Cap = $950,000,000
  • Market Cap Sum = $177,450,000,000
  • Coin 1 Total Percentage = 125,000,000,000 / 177,450,000,000 = 0.704 = 70.4%
  • Coin 2 Total Percentage = 30,000,000,000 / 177,450,000,000 = 0.169 = 16.9%
  • Coin 3 Total Percentage = 12,000,000,000 / 177,450,000,000 = 0.068 = 6.8%
  • Coin 4 Total Percentage = 8,000,000,000 / 177,450,000,000 = 0.045 = 4.5%
  • Coin 5 Total Percentage = 1,500,000,000/ 177,450,000,000 = 0.008 = 0.8%
  • Coin 6 Total Percentage = 950,000,000/ 177,450,000,000 = 0.005 = 0.5%
  • Coin 1 Portfolio Allocation = 70.4% > 20% Max Allocation -> 20%
  • Coin 2 Portfolio Allocation = 20%
    • 100% – 20% = 80%
    • Sum of remaining percentages = 16.9 + 6.8 + 4.5 + 0.8 + 0.5 = 29.5
    • Coin 2 Percentage of remaining coins = 16.9 / 29.5 = 0.573 = 57.3%
    • 80% * 57.3% = 0.8 * 0.573 = 0.458 = 45.8%
    • 45.8% > 20% Max Allocation -> 20%
  • Coin 3 Portfolio Allocation = 20%
    • 100% – 20% – 20% = 60%
    • Sum of remaining percentages = 6.8 + 4.5 + 0.8 + 0.5 = 12.6
    • Coin 3 Percentage of remaining coins = 6.8 / 12.6 = 0.539 = 53.9%
    • 60% * 53.9% = 0.6 * 0.539 = 0.323 = 32.3%
    • 32.3% > 20% Max Allocation -> 20%
  • Coin 4 Portfolio Allocation = 20%
    • 100% – 20% – 20% – 20% = 40%
    • Sum of remaining percentages = 4.5 + 0.8 + 0.5 = 5.8
    • Coin 4 Percentage of remaining coins = 4.5 / 5.8 = 0.776 = 77.6%
    • 40% * 77.6% = 0.4 * 0.776 = 0.31 = 31%
    • 31% > 20% Max Allocation -> 20%
  • Coin 5 Portfolio Allocation = 12%
    • 100% – 20% – 20% – 20% – 20% = 20%
    • Sum of remaining percentages = 0.8 + 0.5 = 1.3
    • Coin 5 Percentage of remaining coins = 0.8 / 1.3 = 0.615 = 61.5%
    • 20% * 61.5% = 0.2 * 0.615 = 0.123 = 12.3%
    • 12.3% rounded down = 12%
  • Coin 6 Portfolio Allocation = 100% – 20% – 20% – 20% – 20% – 12% = 8%

Re-balance As Often As You Can

Portfolio Rebalancing

We recommend rebalancing your portfolio at least once every quarter.  Crypto allocations can change very quickly based on market conditions, and keeping your portfolio allocations aligned with your goals can help minimize risk.  Essentially, re-balancing allows you to utilize a disciplined approach that automatically buys assets that have under-performed and sells assets that have over-performed. So, regular re-balancing helps a person buy low and sell high, all while minimizing risk.

Be sure to check out our other Crypto Strategy Articles:

The strategy in this article is best combined with the other strategies Crypto Renegade teaches.


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

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When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing.

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If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

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For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

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Feel free to ask any questions about the allocation strategies above or suggest your own strategy in the comments below.

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