Core-Satellite Investing is an asset allocation strategy that divides a portfolio into two segments: a stable, often passively managed “core” and more actively managed, higher-risk “satellite” holdings. In crypto, the core typically consists of established, large-capitalization digital assets or stablecoins, providing foundational stability. The satellites comprise smaller, more speculative digital assets or thematic investments aiming for enhanced returns.
Mechanism
The core portion of the portfolio is generally allocated to assets with lower volatility and broader market exposure, seeking long-term growth or capital preservation. Satellite allocations involve tactical positions in specific cryptocurrencies, DeFi protocols, or emerging blockchain sectors, managed with a shorter time horizon or more dynamic strategies. This often utilizes smart contracts or automated trading systems for active management.
Methodology
This investment methodology offers a structured approach to balance risk and return within a crypto portfolio. It provides systematic exposure to the digital asset market while permitting active management to seek alpha through targeted opportunities. Systems architects developing institutional crypto investment platforms utilize this framework to design flexible portfolio management tools, allowing clients to combine stable base holdings with strategic, high-growth digital asset exposures.
An investor can effectively use both by architecting a system that assigns long-term core assets to a traditional broker and tactical satellite positions to a smart app.
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