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Author: Admin | 2025-04-27
Chosen, the investor then selects the individual tokens (i.e., investment selection) within those categories for their portfolio. This method of filtering is sometimes known as ‘top-down’. Alternatively, the investor could start by choosing the individual tokens first, which is known as the ‘bottom-up’ method.Trade ExecutionThis refers to buying and selling crypto tokens once they have been selected to be in (or out) of the portfolio. Transaction costs should be considered, as they can reduce the portfolio return. Another important concept is slippage, which is the actual price that the trade is executed at compared to the price the investor was targeting. For example, if the actual executed price of a buy order turns out to be higher than the target price, it could have negative implications for the potential return.MonitoringThis involves regularly monitoring the performance of the overall portfolio and the individual tokens within it since markets and developments around crypto tokens can change rapidly and affect the characteristics of the portfolio. For example, the investor’s view on tokens inside or outside the portfolio could change due to new developments, leading to deciding whether or not to continue investing in a particular token (or perhaps replace it with another).Additionally, the portfolio’s overall return may not perform to expectations, so the investor may have to revisit their asset allocation and investment selection process to see what changes can be made to potentially help the situation.RebalancingRebalancing is used to restore the target weights of categories and individual tokens in the portfolio. This is because movements in crypto prices naturally change the weightings inside the portfolio. For example, gaming-related tokens could experience a surge in prices due to positive developments in the category, increasing the weighting of this category in the portfolio beyond the target range. Selling gaming-related tokens would be a rebalancing
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