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Use case

Portfolio management for cryptocurrencies: How to manage your portfolio with real-time data

It is very likely that if you are trading cryptocurrencies, you are having a variety of assets within your portfolio. Managing multiple crypto assets can be a difficult task unless you make use of real-time data to constantly monitor your portfolio. We’ll explain how real-time data can help you manage your portfolio.

What is portfolio management?

Portfolio management means to have an eye on several assets that you possess, your so-called portfolio. It is less about trading the single currencies separately, it is rather about the overall development of the portfolio, Usually, investors implement different strategies for their portfolio: For example, the balancing of your portfolio can be considered.

Portfolio Balancing

Balancing in the context of a portfolio means to maintain a specific distribution of the overall value for specific assets. Assuming that your portfolio consists of cryptocurrencies and ICO tokens, you could, for example, choose to keep a ratio of 40-50% per category. That means your overall value can be containing 40% ICO tokens and 60% cryptocurrencies.

By the trades you are doing, your portfolio can change and you have to keep an eye on the overall portfolio to keep the ratio.

Why Portfolio Balancing is difficult without real-time data

As mentioned above, keeping an eye on many different assets is the key element of portfolio management. It is obvious that the difficulty of doing that increases with every additional asset that is bought and it gets almost impossible to manually balance the portfolio when a certain amount of assets is reached.

Furthermore, price fluctuations affect balancing. If the price of one single assets rapidly rises, it then possesses a huge stake within the portfolio. Following the value-driven approach of your portfolio balancing, you would then have to rebalance it. That might be possible with two or three assets, but only real-time market data integrated by APIs from providers such as CoinAPI would make it feasible to do so with a large amount of assets.

Implementing real-time market data not only eliminates the manual efforts of managing portfolios, it also allows to involve much more data that are very difficult to consider manually, such as the price levels on different exchanges – not even speaking about further analysis you could do with that data like similarity detections in price movements between different assets.

The CoinAPI services can also be leveraged by application developers and service providers. Our customer Shrimpy for example built their application, which is used by cryptocurrency traders looking to automate their trading and portfolio strategies, with data provided by CoinAPI. Read more about the success story of Shrimpy and their use of CoinAPI for portfolio balancing in our blog.

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