How to monitor your crypto portfolio’s performance

Crypto is a compelling candidate for portfolio diversification thanks to its historically low correlation with traditional assets and its asymmetric return potential. But exposure alone is not a strategy—it requires ongoing monitoring.

Whether you hold digital assets directly or through ETPs, your objective as an investor is to manage risk while capturing upside. This means tracking performance, understanding what the numbers are telling you, and knowing when to act.

This guide walks you through the essential indicators and explains how to put them into practice using CoinShares’ own portfolio data.

Key portfolio management and monitoring indicators

No single metric tells the whole story. The three indicators below are complementary: together, they give you a much fuller picture of how your portfolio is performing on a risk-adjusted basis.

Volatility

Volatility measures how much an asset’s price fluctuates over time. Larger price swings—whether up or down—mean higher volatility.

It’s often used as a proxy for risk. Higher volatility can mean larger potential returns, but it also means larger potential losses. The crypto market is particularly prone to sharp swings, which is precisely why tracking how much volatility crypto adds to your portfolio is a crucial risk management step.

An easy way to monitor this: pull up the price charts of the digital assets you’re exposed to on your investment platform and observe the magnitude of recent fluctuations. If you invest via ETPs, your brokerage dashboard will display this alongside your other holdings.

Maximum drawdown (MDD)

Maximum drawdown represents the largest single drop from a peak to a trough before a new high is reached. It’s a measure of downside risk—but unlike volatility, it doesn’t tell you how frequently drops occur or how long recovery takes.

Monitoring MDD helps you understand the worst-case scenario your portfolio has experienced. In the crypto market, this is especially relevant: Bitcoin has historically seen drawdowns exceeding 50% during bear markets, yet has recovered to set new highs in every subsequent cycle.

To track it, identify the highest point your asset reached, then find the lowest point it dropped to before recovering. The percentage difference is your maximum drawdown.

Sharpe ratio

The Sharpe ratio measures risk-adjusted performance: the excess return earned per unit of risk taken. The higher the Sharpe ratio, the better the reward relative to the volatility endured.

It’s calculated by subtracting the risk-free rate of return (such as a government bond yield) from the portfolio’s return, then dividing by the portfolio’s standard deviation. For example: if your portfolio returned 12% with a standard deviation of 15% and the risk-free rate was 2%, the Sharpe ratio would be (12% – 2%) / 15% = 0.67.

As a rule of thumb, a Sharpe ratio above 1 is considered good—it means the portfolio generates more than one unit of excess return for each unit of risk. Below 1 suggests the risk isn’t being adequately compensated. This indicator is especially powerful when comparing two portfolios with similar return levels.

What a 5% crypto allocation does to a portfolio

CoinShares’ model portfolio uses a fixed 5% crypto allocation within a diversified multi-asset portfolio. The table below shows the impact of different crypto compositions at that 5% level, compared to a baseline portfolio with no crypto exposure.

Several things stand out. First, all three crypto-enriched portfolios historically double the annualised performance of the no-crypto baseline—from 4.8% to between 8.2% and 9.4%—while adding almost no extra volatility. The BTC50 portfolio is actually marginally less volatile than the baseline.

Second, the Sharpe ratios tell a clear story: BTC0’s 0.39 rises to 0.67 with a straightforward Bitcoin allocation, and reaches 0.75 with broader crypto exposure. Historically, that was nearly twice the risk-adjusted return for essentially the same level of portfolio risk.

Third, the maximum drawdown figures remain tightly clustered—between –24.1% and –26.6%. Adding 5% in crypto deepens the worst-case scenario by only 1–2 percentage points, a modest cost for the performance improvement observed.

The correlation column confirms the diversification benefit: all crypto portfolios maintain high correlation with the baseline (above 94%), meaning the overall portfolio behaviour remains familiar and manageable for investors used to traditional multi-asset strategies.

Dollar-cost averaging as a monitoring discipline

Rather than trying to time the market, many investors find that dollar-cost averaging (DCA)—investing a fixed amount at regular intervals regardless of price—is the more sustainable approach.

DCA doesn’t eliminate risk, but it smooths out entry prices over time and reduces the likelihood of making poorly timed lump-sum investments. Combined with the metrics covered in this guide, it allows you to stay invested while staying informed.

We explore this in more detail in our article on investing in crypto for the long term.

How to track your crypto portfolio

The right tracking method depends on how you’re invested.

ETP investors: Your standard brokerage platform will display your crypto ETPs alongside traditional assets in a single portfolio view. This makes tracking, rebalancing, and tax reporting straightforward—no additional tools required.

Direct holders: Crypto exchanges typically provide portfolio dashboards with price charts and performance metrics. For holdings spread across multiple wallets or exchanges, third-party portfolio trackers can aggregate everything into one view.

CoinShares’ transparency tools for ETP investors

One of the advantages of investing through CoinShares ETPs is access to institutional-grade transparency features that go well beyond what’s available with direct crypto holdings.

Coin Entitlement: CoinShares publishes daily Coin Entitlement figures showing exactly how much cryptocurrency backs each ETP share. For staked products, the Coin Entitlement effectively increases over time as staking rewards accrue—meaning your exposure may grow without any action on your part. CoinShares pioneered staked ETPs and has reduced management fees to 0.0% p.a. on these products, with rewards passed directly to investors.

LedgerLens (proof of reserves): CoinShares’ reserves are independently verified through LedgerLens, a real-time attestation solution provided by The Network Firm. This blockchain-enabled tool allows any investor to verify that the crypto physically backing each ETP matches the issuer’s liabilities—at any time. Daily attest reports are viewable and downloadable directly on CoinShares’ product pages.

NAV vs market price: Like any exchange-traded product, CoinShares ETPs have a Net Asset Value (NAV) representing the underlying asset’s value and a market price at which they trade on the exchange. Small discrepancies can occur, particularly during periods of high volatility or low liquidity. Monitoring the spread between NAV and market price helps you assess whether you’re buying at a fair value.

When and how to rebalance

When one asset significantly outperforms the rest, your portfolio drifts from its original allocation. A 5% crypto position that doubles in value while other assets remain flat could push your weighting to 9–10%. If left unchecked, this exposes you to unintended risk.

Rebalancing restores your target allocation. There are two common approaches:

Calendar-based: Rebalance at set intervals—quarterly or annually. This offers discipline and simplicity, but doesn’t respond to sudden market moves.

Threshold-based: Rebalance when any allocation drifts beyond a defined band (e.g. 5% from target). This is more responsive but requires ongoing monitoring.

A hybrid approach—combining a regular review schedule with threshold triggers—often strikes the best balance between cost efficiency and risk control.

Rebalancing enforces a “sell high, buy low” discipline without requiring market timing. For volatile assets like crypto, this is one of the commonly used risk management practices available.

Key takeaways

• Use multiple indicators—volatility, maximum drawdown, and Sharpe ratio—together for a complete picture of portfolio performance. No single metric tells the whole story.

• CoinShares’ model portfolio data shows that a 5% crypto allocation historically nearly doubled annualised returns (from 4.8% to 8.2–9.4%) while adding minimal extra volatility and only 1–2 percentage points of additional maximum drawdown.

• Broader crypto exposure (BTCETH or TOP50) showed the strongest Sharpe ratios—up to 0.75—compared to 0.39 for a portfolio with no crypto.

• Choose tracking tools that match your investment method. ETP investors benefit from consolidated brokerage views; direct holders may need dedicated portfolio trackers.

• CoinShares’ transparency features—Coin Entitlement, LedgerLens proof of reserves, and staking rewards—give ETP investors institutional-grade visibility into their holdings.

• Rebalance regularly to maintain your intended risk profile, and consider dollar-cost averaging as a disciplined long-term investment approach.

Source: CoinShares Research