Thoughts on managing altcoin volatility within a larger $BTC position?
Hey everyone, fairly new to actively managing a crypto portfolio beyond just hodling $BTC, and I've been dabbling in some altcoins like $DOT and $SOL recently. I'm trying to get a handle on how folks here manage the significant volatility swings in these smaller caps, especially when they represent a smaller portion of your overall crypto allocation. It feels like the percentage moves can really skew my overall P&L even if they're a tiny part of the pie.
Are most people just treating these smaller positions as more speculative, or is there a common strategy for position sizing them relative to a core $BTC holding to minimize their impact on overall portfolio variance while still capturing potential upside? Any insight on how more experienced traders approach this would be super helpful.
A common approach is to set clear allocation limits for altcoins, often a small percentage like 5-15% of your total crypto portfolio, and rebalance periodically. This helps in trimming winners and adding to underperformers without overexposing your core $BTC position.