Most crypto portfolios are made up of Bitcoin and some Ethereum.
These two are the main players in cryptocurrencies, but that doesn’t mean that you can’t diversify past them either.
Knowing how to diversify your crypto portfolio in 2025 doesn’t need to be complicated.
With new AI tokens, DeFi platforms, the evolving Bitcoin layer 2, and real-world assets (RWAs), there are numerous additional opportunities.
What Does A Balanced Portfolio Help Achieve?
A well-diversified crypto portfolio helps balance growth with risk by spreading exposure across multiple projects.
What Crypto Diversification is Today
For beginners, only buying Bitcoin and Ethereum is a good starting point.
Until you learn how to manage exchanges and use your crypto wallet effectively, we don’t suggest overcomplicating matters.
But once you have the hang of managing crypto, diversifying further can aid your growth immensely.
Why Putting All Your Crypto in Bitcoin and Ethereum Might Not Be Enough
Bitcoin and Ethereum are the foundations of most crypto portfolios.
As of early June 2025, Bitcoin (BTC) and Ethereum (ETH) dominate the crypto market.
Bitcoin’s market cap is at approximately $2.09 trillion, representing about 60% of the total crypto market, while Ethereum’s market cap is around $301 billion, accounting for roughly 8.6%.
The remaining 31.4% of the market is mixed with other emerging cryptocurrencies.
Other Cryptocurrencies to Consider
⛓️Layer 1 Blockchains
- Platforms like Solana (SOL), Avalanche (AVAX), and Near Protocol (NEAR) are great alternatives to Ethereum as they have unique features.
🔗DeFi Protocols
- Decentralized finance platforms such as Uniswap (UNI), Aave (AAVE), and MakerDAO (MKR) are perfect for lending, borrowing, and decentralized exchanges.
🤖AI and RWA Tokens
- Projects like Fetch.ai (FET) and Centrifuge (CFG) are advancing in integrating artificial intelligence and real-world assets into blockchain technology.
⚡Bitcoin Layer 2
- Developments like the Lightning Network and Stacks (STX) are enhancing Bitcoin’s scalability and functionality.
🎮NFT Infrastructure and Gaming Platforms
- Immutable X (IMX) and The Sandbox (SAND) are expanding the use cases for non-fungible tokens in gaming and virtual worlds.
Protect Your Bitcoin & Ethereum with Material Bitcoin
No matter how your portfolio is distributed, whether you’re heavily invested in Bitcoin, diversifying with Ethereum, or exploring altcoins, security must come first.
Material Bitcoin and Material Ether offer air-gapped, tamper-proof cold storage solutions, keeping your long-term holdings safe, offline, and fully under your control.
Risk Management in a Volatile Market
Crypto markets are known for extreme price swings.
Bitcoin has had major drops before.
In June 2022, it fell 36%, dropping from $29,799 to $19,000.
But in July, it went up 22%, recovering a large portion of its dip.
Smaller altcoins often experience even sharper drops, many losing 70-90% of their value during bear markets.
Diversification helps limit your risk by spreading your investments across different sectors and types of crypto projects.
But it’s important to remember that Bitcoin might stabilize earlier due to institutional demand and adoption.
You should consider this when deciding how much of your portfolio to allocate to trusted assets like Bitcoin and Ethereum and how much to invest in newer projects.
How to Build a Diversified Portfolio Based on Your Risk Profile
When building a crypto portfolio, your personal risk tolerance should be your #1 starting point.
Here is a breakdown of three common profiles:
Strategies for Diversifying Over Time
Knowing how and when to buy crypto is just as important as knowing what crypto to buy.
DCA, Lump Sum, and Buying the Dip
At first, knowing whether to use DCA vs. lump sum buying can be confusing.
With dollar-cost averaging (DCA), you invest a fixed amount at regular intervals, reducing the pressure of trying to time the market.
However, many long-term investors prefer to buy a large amount at once to start seeing benefits ASAP.
It’s also common to keep extra funds ready to buy the dip during sharp corrections.
Since BTC often rebounds strongly after major drops, these dips can offer some of the best long-term entry points if made carefully.
Rebalancing After Market Shifts
Over time, some assets will grow faster than others and throw off your original allocation.
Rebalancing your crypto portfolio means adjusting your portfolio to take profits from outperforming assets and reinvest in areas that might have fallen behind.
This helps to keep your risk aligned with your investments.
Tools and Platforms That Help You Diversify
Today, there are many tools that can help you track, analyze, and adjust your crypto holdings efficiently.
Portfolio Trackers With Real-Time Analytics
These apps help you monitor your entire portfolio across multiple wallets and exchanges in one place.
They show real-time performance, sector allocation, and historical trends.
Exchanges and Wallets
Choosing the right platforms also makes diversification easier:
Binance
➡️Has a wide selection of tokens, including many DeFi, AI, and RWA projects.
Coinbase
➡️Simple interface and regulated environment, focused on major assets.
Kraken
➡️Good selection of altcoins with strong security standards.
Material Bitcoin
➡️Ideal for long-term Bitcoin, Ethereum, and USDT storage, offering secure cold wallets for your core portfolio holdings.
Final Take: How to Diversify Your Crypto Portfolio
The main objective for a healthy crypto portfolio is to maintain stability at its core with some alternative growth potential.
Most investors should keep a solid BTC and ETH base while diversifying into other sectors like Layer 1 blockchains, AI, DeFi, RWAs, and Bitcoin Layer 2.
Having a chunk of stablecoins within your crypto portfolio will help reduce the volatility and gain flexibility for new investments.
For your long-term assets, make sure to use a secure cold hardware wallet like Material Bitcoin so that you never need to worry about losing your portfolio to hackers.
As the market evolves, keep an eye on new trends, but don’t invest big, especially if you don’t understand their use.
Maintain knowledge of regulations, and don’t forget to rebalance your portfolio every few months.
FAQs
Is Bitcoin still important for a diversified portfolio?
- Yes. Bitcoin remains the most established crypto asset and serves as the core for most portfolios.
How many coins should I hold?
- Most well-balanced portfolios hold about 5-10 carefully selected assets across different sectors.
How often should I rebalance?
- Many investors rebalance every 3–6 months, depending on market conditions and portfolio drift.
Is diversification still useful if all coins crash together?
- While correlations increase during crashes, sector diversification can still help with faster recovery and smoother long-term growth.
0 Comments