Add factor columns beside every holding
Use a fictional portfolio and record weight, broad-market factor, ecosystem, stablecoin, venue and custody route. Then total the weights for each shared factor.
A sample may show only 25% in one token but 75% of the whole portfolio depending on the same stablecoin for trading pairs. Another portfolio may have only 40% in one ecosystem but 100% on one exchange.
Run three different shocks
Stress the portfolio under:
- a broad crypto-market decline;
- a stablecoin impairment affecting conversion values;
- a venue outage preventing exits.
For each shock, mark which positions are directly affected, indirectly affected and operationally trapped. Do not force everything into one correlation coefficient; some dependencies are operational rather than statistical.
Define the review trigger
Choose a measurable trigger such as “review whenever one factor exceeds 50% of portfolio value” or “review when rolling correlation among the largest positions rises materially above its normal range.” The threshold is an example; the point is to make concentration observable before the shock.
*Cryptocurrency and virtual asset transactions are highly volatile and irreversible, may result in significant losses, and do not guarantee returns; customers should trade only after understanding the risks involved.
