Constructing a cryptocurrency portfolio hedge involves balancing asset correlations. Allocate 40-50% to BTC as a market leader, 20-30% to ETH for smart contract platform exposure, and 15-25% to altcoins with growth potential. Include 5-10% in stablecoins for liquidity. Use derivatives like futures or options to hedge against volatility. For example, during the 2022 market downturn, portfolios with proper hedging experienced 30-40% smaller losses compared to unhedged positions. Regular rebalancing maintains target allocations.