How to Diversify Your Crypto Portfolio in 2025

Many crypto fans consider diversifying their portfolio at some point in time. However, the perceived complexity of doing so may put them off.

Portfolio diversification often feels like a daunting task, but in reality, there are several straightforward principles that can help you along the way. Let's take a look at what those are, and see how Ledn can integrate into your investment goals. 

What is Crypto Portfolio Diversification?

Crypto portfolio diversification is where you invest in multiple digital assets. For instance, rather than simply holding BTC, you could also hold Ethereum, USDC, or smaller altcoins.

Why is a Diversified Crypto Portfolio So Important?

A well-diversified crypto portfolio helps mitigate risks around volatile markets, as it would prevent one asset plummeting and dragging your finances down, by spreading your options across a range of areas. Many perceive this as a healthy strategy that avoids over-reliance on a single point. It is essentially the opposite of putting all your eggs in one basket.

Three Key Ways to Diversify Your Cryptocurrency Investments

Let's take a look at three top methods of diversifying your crypto portfolio.

Diversify by coins and tokens:

The easiest method of diversification is to simply hold different crypto assets. In its most basic form, that could be holding just two assets, such as Bitcoin and Ethereum, and on the more complex end it could involve having 10+ coins and tokens.

The amount you hold is up to you, but it is worth noting that having more assets does not automatically equate to a smarter strategy. For the best results, it is good to research every coin and token you plan on holding, and see if they align with your investment goals.

Diversify by asset class:

This industry is primarily made up of cryptocurrencies, however, there are a select few other asset classes that are also around. For instance, NFTs are a separate class that run on cryptographic technology, but which function separately from digital money. You could choose to buy and hold a few specific NFTs to add some variety to your portfolio, alongside your typical assets like Bitcoin and Ethereum.

That being said, it’s worth considering that in late 2024 and early 2025, the NFT market is not as well-revered as it used to be. Therefore, you should be extremely cautious about which assets you choose, as they’re a more volatile market than ever before.

You could also consider stablecoins to be a different asset class as well, although this will depend on whether you view them to be cryptocurrencies in their own right, or rather an emulation or representation of their pegged assets. For example, if you see USDC as a mere placeholder for the US dollar, then any investment in it would count as diversifying your crypto portfolio by adding fiat.

Diversify by investment vehicle:

While most people tend to invest in crypto assets by simply buying and holding them, there are other methods available. In fact, you can now invest via ETFs (or exchange-traded funds). These are investment vehicles that track the performance of a particular index, sector, commodity, or other assets, but can be bought and sold on stock exchanges just like individual stocks.

Related Content: Bitcoin ETFs vs. Bitcoin: Which is Better?

Advantages & Disadvantages of a Diversified Crypto Portfolio

Crypto diversification is a great option for many people, but it is definitely not for everybody. Let's break down some of the pros and cons to give you a fuller picture.

Advantages

Reduces risk: If you spread your assets around, then you reduce the chances of having your holdings wholly drop because of volatile cryptocurrency markets. Spreading your finances across various locations achieves this because even if one asset plummets, the others may buffer it.

Improves odds of picking a top investment: Technically, the more assets you invest in, the higher your chances are of picking one that will skyrocket. The reality is nowhere near as simple as this, but it is reasonable to argue that having a handful of well-chosen crypto assets puts you in a better position than holding just one and limiting your exposure.

Can reduce overall portfolio volatility: You can set up your portfolio in a way that is designed to offset potential market volatility. For instance, if you are a big fan of altcoins, you can add Bitcoin to your portfolio to soften the blow, should your smaller coins and tokens drop in value. While the crypto sector tends to move synchronously, altcoins are known to be more volatile than the giants in the space (like Bitcoin and Ethereum), so you can use them to your advantage. This is especially true in 2025, where altcoins are struggling to find their footing.

Disadvantages:

Requires more knowledge: The amount of knowledge you need to balance and diversify a portfolio is relatively large. While you do not need a degree in Economics to do so, it is a good idea to get acquainted with some financial terms and principles, as well as research what assets might suit your needs.

Time-consuming: Portfolio diversification is not something that you can do in just a couple of hours. It should ideally take several days worth of research, and a relatively sizeable chunk of time taken to make purchases. This is especially the case if you are going for very small and little-known altcoins.

Can still lead to losses: Even the most balanced and meticulous portfolio can lead to losses. This is the sad reality of trading in any sector (let alone the crypto space). While diversification helps to prevent some of the dangers from negatively volatile cryptocurrency markets, it cannot fully mitigate the risk. 

Diversification works best when you pick from a range of assets or investment vehicles that are known to react differently to market sentiment and news. For instance, stablecoins are aligned with the fiat market, rather than Bitcoin and Ethereum. You could also look for assets that have a significantly different chart compared to other coins and tokens, meaning they are known to move out of sync. Monero (XMR) is a good example of this, as it tends to rally on its own, without aligning to the rest of the market.

Three Tips to Achieve a Diversified Portfolio

There are tons of methods out there to help you diversify your portfolio, and going through them all would be far beyond the scope of this piece. However, we can definitely take a look at three strategies that people often follow.

Buy the market leaders: Many people include Bitcoin in their portfolios as it’s the ultimate market leader. Some like to pair this with a prestigious ecosystem-focused asset like Ethereum or Solana as these have reputable histories and strong communities.

Look at the market cap: If you are interested in altcoins, then it is a good idea to look at market caps. This means assessing the total value of a cryptocurrency by multiplying its current price by its circulating supply. This gives you an indication of its popularity, size, and potential for growth.

Use a crypto savings account to maximize returns: For your long-term holds, it is a good idea to consider a crypto savings or Growth account, as these can provide you with interest over time. This means that while your crypto investments are stored safely in the hands of a trusted service, you can get returns on them which contribute to your overall financial strategy. For example, with Ledn, you can open a Growth account for Bitcoin, Ethereum, USDC, and USDT, and currently earn up to 8.5% APY on your cryptocurrency holdings.

An Example of Good Crypto Portfolio Allocation

There are tons of strong diversified crypto portfolios out there, all with different strategies and strengths. The model you pick will be extremely dependent on what you are looking for in a portfolio, and what types of assets are appealing to you. Let’s break down three examples a diversified portfolio to give you an idea of how to do the same yourself.

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Lower Risk Portfolio

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A lower-risk crypto portfolio is likely to only contain BTC and stablecoins like USDC or USDT. A standard allocation could be:

• 50% BTC
• 50% USDC (stored in a savings account to earn interest).

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BTC is a safer bet compared to other assets as it tends to perform better than altcoins. And having a significant portion in a stablecoin savings account helps to offset market volatility via your returns.

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Medium Risk Portfolio

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A medium-risk portfolio is likely to include an asset like Ethereum within the mix, adding more diversity, but also introducing more chances for losses, as Ethereum in 2025 is not the top-level performer that it used to be. An allocation in this type of portfolio could look like the following:

• 50% BTC
• 25% ETH
• 25% USDC

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All three of these assets could be stored in a Ledn Growth Account, giving passive returns, which helps offset the risk. Notice as well that BTC has the highest allocation? This helps reduce volatility.

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High Risk Portfolio

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The higher the portfolio risk, the more variety you’ll find. These are often longshots, in the sense that the people behind them have a strong feeling about particular assets that might go against the grain, or not conform to typical advice. They could look something like this:

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• 50% made up of various low-market cap altcoins
• 30% made up of an ecosystem coin like Ethereum and/or Solana
• 15% BTC
• 5% in NFTs

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This is a dangerous setup, as it will be subject to significant market volatility. Portfolios like this are not for the faint of heart.

Concentrated vs Diversified Crypto Portfolios

Crypto diversification is good to consider, regardless of your situation, but that does not mean everybody should actually go ahead and try it out. Individuals who want more exposure to the crypto market, and who are curious about more than one asset, are likely to be the ones who get the greatest benefits out of it.

However, if you are somebody who is comfortable holding just one cryptocurrency, and are not looking to expand into other aspects of the industry, then a concentrated portfolio might be ideal. This is also the case if you are using Bitcoin predominantly as a store of value (similar to how people hold gold investments). In the end, it comes down to personal preference.

A diversified portfolio gives you greater range, but spread thinner. A concentrated portfolio focuses on one or two areas more deeply, but lacks the coverage. These are the core differences.

Why Hold Your Crypto With Ledn?

If your crypto diversification plans involve Bitcoin, Ethereum, USDT, and/or USDC, then you should consider storing them in one of Ledn's Growth Accounts. These are specialized savings accounts where you can earn interest on your holdings over a prolonged time. For stablecoins, they can currently even reach up to 8.5% APY.

This can actually count as its own type of diversification, as the returns you make from a Ledn Growth Account can be considered an investment vehicle in their own right, because it offers a different revenue stream. If you do not plan to access your assets for some time, then it makes sense to go for this route, as the savings add up and help to balance out market volatility (at least to a small extent).

Conclusion

As you can see, diversifying a crypto portfolio is not exactly a straightforward task. However, for some people, it is by all means worth it, and can be a fantastic strategy when it comes to trading and holding in this sector. If your plans involve BTC, ETH, USDC, and USDT, be sure to consider Ledn's Growth Accounts as a place to hold these assets, as you can currently earn up to 8.5% APY on them. Not only is this an impressive way to make returns on your unused assets, but it can help add diversity to your overall strategy by providing a new revenue stream, and therefore offset some volatility risks by bringing in reliable returns.

Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views. There are risks involved with buying, selling, or holding digital assets as explained in Ledn's Risk Disclosure Statement, which can be accessed here.

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