Core and satellite: how to arrange your money

In the last piece we worked out how much to invest. Say the cap you arrived at is a few thousand dollars — so once that money is in crypto, do you buy all bitcoin? Or split a bit into the small coins your feed is full of, the ones someone is always posting about doubling overnight? Most people make this step on gut feeling, and the result is usually “whatever has run up hardest lately, pile in there.”

I went down that road too. When I got in back in 2021, the bulk of my money actually sat in a pile of small projects that sounded sexy at the time, and I held relatively little bitcoin. When the 2022 downturn came, the small coins fell far harder than the large caps, and a few simply vanished. Only then did I get one lesson: money shouldn't be placed all the same way — it has to be layered.

Why split it in two instead of treating it as one lump

The trouble with treating all your crypto money as one blob is that you can't satisfy two clashing needs at once: you want to hold steady and sleep well, and you also want to chase a bit of high upside. Those two things call for completely different assets, and forcing them into one basket means you get neither the steadiness nor the staying power for the gamble.

The idea of splitting is simple: physically separate the steady money from the upside money. One part is the core, in charge of “I have to be able to hold this”; one part is the satellite, in charge of “if this little bit is lost, I accept it.” Each has its own temperament, and because you know which is which, you don't lose your head when the market moves.

This isn't some clever invention. Traditional investing has had the “core-satellite” idea for a long time. I've just carried it into the far more volatile arena of crypto, and dialed the satellite's expectations a notch harsher along the way — because in crypto, when a small coin is meant to go to zero, it really does.

The core: the part you can sleep on

The core is the bulk, and the foundation. What goes in it? The large caps you understand best, with the deepest liquidity and relatively smaller swings. In crypto that basically means bitcoin and ethereum.

Why those two? Not because they're guaranteed to rise, but because they've been through full bull-and-bear cycles, have the deepest markets, and the most transparent information. They'll still fall hard, but at least you don't have to wake up at night worrying they'll go to zero tomorrow or that the team will run off. The core isn't about rising fast; it's about being able to hold — the kind of holding that lets you keep sleeping through a bear market.

My attitude toward the core is “once you've bought it, leave it alone as much as you can.” It's the ballast of your whole portfolio. Drag ballast around every day and the ship stops being stable. What truly tests a person isn't how much the core makes when times are good, it's whether you can keep your hands off it when times are bad.

The satellite: the part you can afford to lose

The satellite is the small portion, in charge of chasing upside. It holds the things that swing harder, might rise faster, but might also fall horribly or go to zero — smaller projects, things you've researched and feel have a story.

The most important thing about the satellite isn't what goes in it, it's that its total size must be small enough that “losing all of it wouldn't shake your whole portfolio.” You have to sentence it to death in your head in advance: this money, I treat it as if it could disappear at any moment. Only by setting the satellite with that expectation will you stay calm if it actually blows up.

There's a counterintuitive upside here: precisely because the satellite is small and you've accepted it could go to zero, you can actually hold it more calmly. So many people set the satellite too big, can't sleep at the first dip, and end up selling at the bottom on a deep fall — it's not that the satellite itself is bad, it's that the position was sized wrong, forcing the person into irrational moves.

And one honest point: the satellite isn't an excuse to “buy lottery tickets.” Affordable to lose doesn't mean buy anything. Even for the small portion, you should know what you're buying and why. The difference is that with the core you're after certainty, while with the satellite you're willing to pay a little tuition for an uncertain possibility.

Two sample ratios

So how much core, how much satellite? I'll give two templates to adjust from. First, to be clear: the ratios below are about how to split “the money inside your crypto allocation,” not its share of your total assets. How much it should be of total assets was already set in the last piece; I won't redo that math here.

Template	Core (BTC / ETH and other large caps)	Satellite (smaller, upside-chasing)	Who it suits
Conservative	About 85%	About 15%	Newly in, no read on volatility yet, or simply someone who wants stability. The satellite is small enough to barely move your nerves.
Balanced	About 70%	About 30%	Has been through at least one proper downturn, confirmed they can take it, and wants a bit more upside.

I'm on the conservative side myself these days. Not that I don't want the upside — it's that after getting burned I understand: with the core steady, the whole portfolio has a gentle temperament and I can hold it for the long haul; keeping a small satellite both scratches the itch to try something and stops me from blowing up my own nerve in one go.

For beginners, my advice is to start conservative. Once you've genuinely survived a proper drawdown and confirmed you're not just talk, then consider shifting toward balanced. A ratio isn't smarter for being more aggressive; it's smarter for matching who you are.

Why beginners shouldn't go all in on the satellite

This is the point I most want to stress to newcomers. People just in are most easily seduced by “the doubling story,” feel buying large caps is too slow, and dump everything into small coins. I get that feeling — it was me back then. But it's almost the most common, and most expensive, trap a beginner falls into.

• Small coins fall far harder than large caps. In a deep bear the large caps drop seventy or eighty percent, while plenty of small coins get cut in half and then cut in half again, even delisted to zero. You think you're chasing high upside; you're really gambling on survival.
• You don't yet know your own tolerance. Before going through a real downturn, everyone overestimates themselves. Going all in on the satellite means placing your biggest bet at the moment you know yourself least.
• With no core to fall back on, you can't hold. If your whole portfolio is high-volatility stuff, one drop and you panic, and panic makes you flail, and you mostly end up selling at the lows. The core exists precisely to give your nerve a floor.

The right order is the reverse: build the core first, lay a solid foundation, then add to the satellite a little at a time. Skip the foundation and just dream of a pretty loft on top, and the first gust knocks it over.

Even after it's set, it needs a nudge now and then

Even if you've set it at 85/15, after a while that ratio drifts on its own. Say a coin in your satellite suddenly rips higher — your satellite might climb from 15% to 30%, and at that point your whole portfolio has quietly become much more aggressive than you originally intended.

The reverse holds too: the satellite gets hammered, its share shrinks, and your portfolio becomes more conservative than you planned. Either way, the risk you're actually carrying is no longer the one you set out with.

The fix is called rebalancing — every so often (no need to be frequent, a look every few months is plenty), pull the ratio back to your target. I wrote a separate piece on it, covering when to nudge, how to nudge, and not to nudge too often: how often to bring your position back into line.

Recap: foundation first, upside later

To boil this piece down to one sentence: split your crypto money into a core and a satellite — the core is for stability, is the bulk, holds large caps; the satellite chases upside, is the small part, is affordable to lose. Beginners start at a conservative 85/15, build the core before adding the satellite, and don't go all in on small coins from day one.

Getting it arranged isn't a one-and-done. After a while it still needs the occasional nudge. In the next piece we talk about the rules of getting in and out — when to lock in profit, and when to admit you're wrong and walk.