The practice of spreading investment across multiple assets to reduce idiosyncratic risk. In crypto, diversification is weaker than in traditional finance — crypto assets are highly correlated, especially in drawdowns. A portfolio of 20 different altcoins is mostly one bet (broad altcoin direction), not 20 bets. True diversification requires exposure outside crypto.
Diversification
The practice of spreading investment across multiple assets to reduce idiosyncratic risk. In crypto, diversification is weaker than in traditional finance — crypto assets are highly correlated, especially in drawdowns. A portfolio of 20 different altcoins is mostly one bet (broad altcoin direction), not 20 bets. True diversification requires exposure outside crypto.
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