Are you a crypto investor looking for a tool to manage all your currencies in one place? Enter crypto portfolio trackers.
A cryptocurrency portfolio tracker is a digital platform that allows you to track the performance of your cryptocurrency holdings in a single place. It provides real-time market data, historical price charts, and other analytical tools to help you make informed investment decisions.
Such trackers are essential for you if you have a diversified portfolio of cryptocurrencies. A portfolio tracker can help you quickly and easily see how your portfolio is performing overall and identify any individual coins that are underperforming or overperforming.
This article will cover the importance of using a cryptocurrency portfolio tracker.
Importance Of Managing Cryptocurrency Investments
Before understanding the importance of crypto portfolio tackers, let’s first understand the need to track and manage crypto investments in the first place.
Diverse Range Of Cryptocurrencies
Cryptocurrencies have an ocean of tokens to invest in; from Bitcoin to Ethereum, you can choose many altcoins to invest your money. According to Statista, till March 2023, more than 20,000 cryptos were available for trading. This can make it challenging to track all your investments, especially if you have a diversified portfolio.
Multiple Exchange Platforms
As a seasoned investor, you may use multiple exchanges to buy, sell, and trade cryptocurrencies. It can make tracking your overall portfolio performance difficult, as you need to keep track of your holdings on each exchange individually.
Need For Effective Management
Cryptocurrencies are a volatile asset class, and their prices can fluctuate wildly. This means that it is important to manage your cryptocurrency investments effectively.
The Importance Of Using A Crypto Portfolio Tracker
Now that you have understood the need to track your investments, let’s now cover the significance of the crypto portfolio tracker.
Comprehensive Asset Overview
One of the most critical parameters offered by the crypto portfolio tracker is to allow you or any other investors to track all their investments under a single tab. This provides a consolidated view of their holdings and helps you with real-time value tracking of your assets.
This feature of the crypto portfolio tracker allows you to instantly see your entire portfolio’s current value and each coin’s individual value. It’s essential for making informed investment decisions and managing your portfolio risk.
In addition to real-time value tracking, a crypto portfolio tracker can also provide insights into the individual performance of each coin in your portfolio. This includes historical price charts, trading volume, and market cap. This information can help you identify which coins are performing well and which may be underperforming.
Informed Decision Making
A crypto portfolio tracker can help you make informed investment decisions by comprehensively viewing your portfolio performance, asset allocation, transaction history, and market trends. This information can help you identify which assets are performing well and which may require adjustments.
In addition to that, a crypto portfolio tracker can also help you mitigate risk by allowing you to track your portfolio’s volatility and exposure to different asset classes. This information can help you identify and manage potential risks.
Moreover, manually tracking crypto investments across different platforms can be time-consuming and error-prone. A crypto portfolio tracker can automate this process, saving you time and hassle.
These trackers can also help you reduce errors by automating the tracking of your investments. This can be especially helpful if you have a large and complex portfolio.
Tax Compliance
Cryptocurrency taxation is complex for several reasons, including:
- Cryptocurrencies are a relatively new asset class, and tax authorities worldwide are still developing clear guidance on taxing them.
- The volatile nature of cryptocurrency prices can make it difficult to calculate capital gains and losses accurately.
- Cryptocurrency transactions can be complex and challenging to track. For example, you may have traded cryptocurrencies on multiple exchanges or used decentralised exchanges. This can make it hard to track your transactions and calculate your tax liability manually.
Crypto portfolio trackers and crypto tax software such as KoinX can help you simplify cryptocurrency tax reporting by generating detailed reports of your transactions and capital gains. These reports can be used to complete your tax return and avoid penalties accurately.
Now that you have understood the importance of a crypto portfolio tracker, let’s discuss how these trackers function under different crypto market conditions.
Portfolio Tracking In Different Market Conditions
Bull Markets
Bull markets can be exciting for you if you are a crypto investor. Stock prices are rising, and everyone seems to be making money. It’s easy to get carried away and start making impulsive investment decisions.
However, it’s important to remember that bull markets don’t last forever. There will be corrections and downturns along the way. That’s why it’s important to continue tracking your portfolio even during a bull market.
Tracking your portfolio using a good crypto portfolio tracker lets you stay on top of your performance and identify potential concerns early on.
For example, some of your holdings outperform the rest of your portfolio. This could be a sign that it’s time to rebalance your portfolio. Some of your holdings are underperforming, which could signify it’s time to sell and reinvest in other assets.
While tracking your cryptocurrency portfolio can be a breeze during a bull market, it’s a different ball game when the bear market hits.
Offsetting The Position
Bear markets can be challenging for investors and portfolio tracking can become even more critical. As the market declines, monitoring your investments closely and adjusting your portfolio is crucial.
Emotional distress is one of the biggest challenges of portfolio tracking in a bear market. Feeling anxious or even panicked when your investments are losing value is natural. However, it is essential to stay calm and rational during this time. Another challenge is that bear markets can be volatile, making predicting your portfolio’s performance difficult. This can lead to uncertainty and frustration.
Despite the above challenges, there are several things you can learn and do to adapt your portfolio tracking in a bear market.
Review Your Asset Allocation
It’s essential to review your asset allocation and ensure it’s aligned with your risk tolerance and investment goals. If you are too heavily invested in stocks, consider shifting some of your money to bonds or less volatile assets.
Rebalance Your Portfolio Regularly
You should rebalance your portfolio regularly. This means selling some of your winners and buying more of your losers to maintain your desired asset allocation. Rebalancing can help to reduce your risk and improve your long-term returns.
Stay Disciplined
It is crucial to stay disciplined and avoid making impulsive decisions. When the market is down, selling your investments and cutting your losses is tempting. However, this is often the worst time to sell. Instead, you should focus on your long-term investment goals and stick to your plan.
Conclusion
A crypto portfolio tracker is essential if you plan to invest in cryptocurrency and want to gain massive profits by taking minimum risks. It helps you to track different altcoins, allowing you to focus more on trading.
If you are searching for a good portfolio tracker, you can go with KoinX. It offers one of the best crypto portfolio trackers, which keeps you ahead of all other investors. Moreover, the platform helps you with tax compliance by automatically calculating taxes based on your national jurisdiction. So why wait? Join KoinX today and make your crypto tracking easy.
