Bitcoin Forum

As many people know, cryptocurrencies are extremely correlated with each other. When Bitcoin goes up everything goes up and the other way around.

Does it make sense to buy a portfolio or should we just hold Bitcoin?

I've just posted an article on Medium analyzing diversification benefits! What do you think?

https://medium.com/velvet-capital/cryptocurrencies-not-only-diversify-other-assets-they-diversify-each-other-4266eee074ec?source=friends_link&sk=0ff4a0fa7a83eca9966fad28a2da303f

You have tried to touch a great topic on crypto niche although i dont think there is much benefit with diversifying your investment in bunch of cryptos regardless of the sector that crypto is in. Like you said all crypto will just follow bitcoin price during any huge movement just like how all US stock pump or dump altogether.

True Diversifying will be when you diversify your investment between Stocks, crypto, cash and real estate.

Hmm for me it is best if you buy a cryptocurrency that would best fit for you and also what you are usually using like for example bitcoin. If you are going to ask me in which coin I am using, I preffered to choose bitcoin. I dont use any other coins except bitcoin because for me it is the best coin and it has the highest value for me.

It is not so easy to say that all coins will follow the bitcoin price movement. Sometimes bitcoin prices start moving up then altcoins may stop for a while and only when bitcoin prices start stabilizing then only altcoins prices go up. But if you hold good altcoins then you may get better returns compared to holding just bitcoin. But in the long run, all coins will follow bitcoin prices. I prefer to hold a few good altcoins as well instead of just investing all in bitcoins.

You can diversify your portfolio in altcoin besides bitcoin because the more coins type you have, the big chance for you to make a profit from the bull run later. But unfortunately, we are hard to find what is the coin that we should buy because there is no sign for which is the right coin, and we can only predict for some coins that can increase.

I think you can search for the other coins and not focus on ethereum, ripple, because we have so many altcoins that you can buy. Many people say that ethereum and ripple can go to the higher price in the next bull run, but you don't have to follow them, or you follow them, but you only invest in some money. You need to find by yourself the coins so you can make a profit from the coin and don't just follow other people's advice without research.

Diversifying is better because sometimes you get a very nice altcoin that are cheap and their rate of increase when bitcoin is rising is very high and fast. This could turn someone into riches within a short time.

no they are not. everyone already knows that bitcoin is the only thing that goes up and the rest are always going down against bitcoin. it has always been because everyone who trades or invests are doing it in bitcoin but whenever bitcoin price stabilizes they go into altcoins to make some short term profit then as soon as bitcoin starts moving (up or down) they dump their altcoins and rush back to bitcoin.

take a look at the long term price movement of altcoins, since they are on a downward trajectory they are never good for long term investment in a "portfolio". they can not be considered as diversification ever.

I don't think so. Look at how big ETH is and how many have build on the platform, it is still BTC's bitch. I'd love for cryptocurrencies to detach from Bitcoin but I don't see it happening any time soon. the problem is that a lot of times the market moves together and the reason is because people are afraid that when they see bitcoin dropping it means their alt coins will drop so they start to sell the alt coins and put downward pressure on them. they could be detached today if there were more educated traders in the market and less people without trading experience.

I gave the article a read for a second i thought this might be something good but turns out it's just another Fancy Pump & dump group trying to use a study ^[1] (https://www.sciencedirect.com/science/article/pii/S1544612318300990?via%3Dihub). What experience does @velvet.capital has in the real world? What kind of results have you achieved? I can optimize a simple MACD EA ^{( Expert Advisor (https://admiralmarkets.com/education/articles/automated-trading/how-does-a-forex-expert-advisor-work) )} through Backtesting and claim X amount returns but that doesn't mean that EA will perform the same in the real market. Backtesting results should be taken by grain of salt... Anyway this sounds like a pump and dump group, basically allow us access to your account so that we can use your money to pump and dump shitcoins... Plus your website looks sketchy as hell...

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Source:
[1] https://www.sciencedirect.com/science/article/pii/S1544612318300990?via%3Dihub

On my idea about using bitcoin all alone, that would be unexpected yet when time comes it could reached the highest value. After that we needed to divert on other coins to acquire possible profit, while btc price seems to be stabilized at any moment. For now, it's good to focus with bitcoin and somehow diverting with other promising one would be a good options.

We might say that the rest of the crypto are all dependent on bitcoin's movement. Obviously, every trading pair is BTC/coin.


I'm not sure if investors are really diversifying cryptos'. I mean BTC is still the king, so it doesn't make sense to invest on some shit coins.

They're not anymore, though.

On Kraken for example, you can trade most alts against dollars or euros. It's no longer the case that you had to convert an alt into bitcoin before you could convert it into fiat.

If an alt does manage to build an ecosystem around it, and also has the ability to be converted directly to fiat, you might start to see divergence.

IMO it's the lack of distinct ecosystems that is holding back alts.

It all depends with the users, and it is true that the growth of altcoins follow the growth of bitcoin. Op has asked then why can't make an investment only on bitcoin or an altcoin. Here one need to be clear, bitcoin's growth pattern is followed but the growth percentage varies. Through this one can get better profit investing on altcoins for a specific time period and bitcoin at some point. This is why everyone prefer to have a diversified portfolio than a single asset investment.

Your notion of when Bitcoin goes up every other cryptocurrency does the same is not always the case as far as i know. There are often times bitcoin bullishness causes massive dump of other currencies and when bitcoin is bleeding others also bleed. My advice to crypto investors is to spot a very good project and invest what you can afford to loose.

Is good to hold bitcoin but it's also better to take advantage of the gain we can get in other alts when they increase while BTC is increasing as they might be cheaper than BTc, just make sure to invest with those that are still improving their project and making some effort in these bear market 

It all depends on your experience.If you are a beginner then most likely it will be more profitable for you to just buy bitcoin

Buying different crypto is also a form of diversification.  Each cryptocurrency have their own phase of rallying since they have different project owner and developer.  They also have different roadmap and different set of investors.  One crypto may crash yet the other one may rally.  So I believe cryptocurrency is different and diversify from each other.

I think that what you say is true, that the other cryptocurrencies that are on the market are greatly affected by the volatility of Bitcoin. I think this is because Bitcoin itself, is the original crypto coin that all others on the market were inspired by. Bitcoin is basically the foundation for all other cryptocurencies to stand on, and due to the rapid swinging in the the volatility, the foundation doesn't feel completely solid yet, so other coins tend to waver a little as Bitcoin the price moves up and down.
  Maybe one day in the future, other cryptocurrency beside stablecoins will become a little more self dependent, but its going to take time.

For me buying different crypto coins is somehow a diversification but in a little way. A more comprehensive diversification is to invest in different forms of investments like stocks, bonds, mutual funds, real estate, etc. Crypto currencies diversify each other in a way that these coins has different values and rates. Mostly its applicable in trading. But as a whole they are of the same for as crypto currencies.

Just look at btc dominance index. There are almost no real diverse in the market

It's always better to have a portfolio of a multiple of good coins than holding a single coin. It's basically to make your money safe by not depending on just a coin or even just a wallet.
We can't predict the future of crypto, even the future of bitcoin with it's limited supply is debetable. To be safe don't put all your money on a single coin.

Most coins do follow what Bitcoin's pump and dumps. Though this might be true, each coin still has some potential on itself and not relying on Bitcoin. Diversify if you truly believe in a specific coin, aside from it being a 'cryptocurrency'.

One notable example that happened is the BSVs pump due CSW claiming to have the list of addresses that contains 1.1M bitcoins. This led to a pump that hyped the BSV community, though it is short-lived since it is later clarified that there are no included private keys to access it.

When Bitcoin goes up, it is either the altcoins go up as well or go down. Which means that the rise of Bitcoin does not have a consistent effect on the altcoins in general. We have seen it countless of times in the past that the rise of Bitcoin gave blood to the altcoins. However, there were also countless of times that Bitcoin and the altcoins are rallying together. Not to mention that there are also pumps that are quite independent from the rest of the crypto market. An altcoin could rise despite a bearish market if there is a significant update. In other words, there is no single pattern that rules the market.

My portfolio is made up of Bitcoin and certain top altcoins which I personally believe will grow bigger and bigger along with Bitcoin. I think it is better this way in case either Bitcoin or altcoins would pump or dump. I could easily shift from Bitcoin to an altcoin and vice versa depending on the market situation. On the overall, however, I am looking at my portfolio's value in terms of Bitcoin.

No one knows really how the market moves. It is not always that when bitcoin falls, other crypto currencies will do too. Remember last year when bitcoin is expected to pump but it did not and while bitcoin is falling, the price of ethereum is increasing creating another ATH at that time. They are different and it depends on the user of that crypto currency not bitcoin.

If you invest in crypto, invest in BTC. Diversification is about putting your money into stocks and real estate as well as crypto

We cannot deny that Altcoin is still following Bitcoin, so I think holding Bitcoin alone isn't just enough. if you want to make a lot of profit then buy some Altcoins, because when the price of bitcoin skyrockets, then altcoins price will also go up, but there are some altcoins that can maintain its price and not affected bitcoin's price. I personally holding more bitcoin compared to altcoins, just hold coin who has a bright future.

You can check the Bitcoin domination on a chart on tradingview. When BTC domination grows the altcoins general price in satoshi value decreases and vice-versa. Regarding your investments depends on what you want to achieve. If you want to multiply your dollars you should track your portfolio in fiat value and not against BTC.

I do think that altcoins have higher growth potential than Bitcoin just because they've got beat so hard by the bear market, but the risk higher too. Make your own analysis and come with a decision. ;)

Bitcoin is the king of this digital currency and it is standing on top in the present time. The change in the value of Bitcoin affects all other crypto coins in the market. Bitcoin is more valuable, powerful and effective of all. I truly agree with your idea of going for diversification would be like welcoming risk. You yourself can better relate the value of Bitcoin with others and then take a decision whether you want to invest in Bitcoin or go for diversity.

I think its a good strategy to diversify your investments but anything which you feel too much is actually not good, so too many alt in your portfolio will just make bigger fluctuations. Holding more than 70% of your money in Bitcoin is suggestible, then hold higher percentage in top alts like ETH or XRP or projects which you think will boom in the future. What people do is hold alts more than 70% of their portfolio, which is too much risky.

I disagree with the first two sentences of the post. Bitcoin does not always pull other things up and vice versa. This correlation is sometimes the case, but it's not always so. I think there was a time when it made sense to diversify the portfolio, and I also did that back in the days before the ATH and what followed. I myself profited quite well with Litecoin and Ethereum, but ever since the great drop Bitcoin has been more or less gaining dominance rather than losing it as was the case when it approached the ATH. Along with Bitcoin establishing itself clearly as #1, other coins are getting fewer investments and are thus not as profitable anymore. The problem with the article is that it refers to research that was done about investments prior to 2018, and I think that things have changed radically since then.

You already found the answers.

^ Bitcoin was leading almost all altcoins movement (but I dont think so about BSV, all I have known they are hype project), we noticed that they are also swinging when the price of bitcoin move. I dunno much about diversifying your crypto asset but for me, diversifying your bitcoin into a stable coin like(USDT) is a good help when immediately cutting your losses if you saw that the market was drastically down. To avoid losses, diversification is the best move. Nevertheless, not all diversifying will have good benefits.

diversifying cryptocurrency is a pretty good strategy to be able to take more opportunities. Basically, BTC does have the strongest opportunity, but there are also many potential altcoins that provide a great opportunity if we are able to get the right timing. Putting eggs in one place is a big risk, so diversifying it is expected to reduce that risk with support from others. What is clear, do not choose shitcoin or new coins whose progress is not yet clear.

It does makes sense to diversify and you should also think outside of crypto if you're talking about diversification. You must be open into another investment that you believe can grow and you understand how you can make money out of it.

I have seen investors in crypto that are also more focused with diversification to the point that they are ignoring and forgetting bitcoin. This is a wrong strategy if they are missing bitcoin on their portfolio then they have multiple of altcoins to their choice. And as you know, bitcoin does affect most of them.

bitcoin is the main benchmark to start investing. Holding a BTC will provide various benefits. In addition to the BTC price which is currently increasing because it will experience halving in May, BTC is also the most valuable.

Applying the diversification method to cryptocurrency will certainly make your altcoin diverse. But you need to analyze what altcoin you want to hold. Make sure that altcoin has a good future, technology that continues to be developed and has a good price.

Some altcoins do follow the price of bitcoins, but there are also some other altcoins that have no effect on the price of bitcoins.
Having a portfolio with a diversified method has many advantages, because not only one coin is held, but a variety of altcoins, but still must choose the best altcoin.

It is better to stick with few good coin rather than buying handful of different coin. Also, apart from those period when crypto price went up few years ago, recently, when bitcoin price goes up, so many altcoin price remain the same while some even drop. This is because people sell altcoin to buy bitcoin during that period

In terms of investment, we have the option to choose between sticking to an altcoin, a bitcoin, or both altcoin and bitcoin. Basically, to accumulate more than one or to stick with a stable currency interchangeably with bitcoin. But in my opinion, I only consider two option. The latter, and to diversify your investment. Because from the concept of diversification, you are making yourself safer from loss, mainly because altcoins have different market condition over time. Leading to a higher chance of profits. Though, taking risk with both bitcoin and a stable coin is effective, it is quite better to find opportunities from new coins especially those that are just starting in the market.

Bitcoin is the more suitable option for all new comers as it is the more stable currency. Altcoin’s image has been wrong in the past time due to cases of frauds and scams. As new beginners have very low experience about the market. I would suggest the new beginners to start with short term trading in Bitcoin than move toward the long term trading for better results. As dealing with others coin is not easy for them

The majority of altcoins are tied up with Bitcoin price, they move when Bitcoin price move. Diversifications are very common in trading when Bitcoin will go up the price they will sell those altcoins that they know it does not have the potential to hold. I will more stick on Bitcoin holding rather than choosing a random altcoin that we dont know if they belong to hype projects. Bitcoin is very safe to hold and it is clear to have an assurance of getting profit.

Bitcoin is the king of the cryptocurrency market and all altcoins are dependent on it. Of course, a portfolio of bitcoin alone is quite good but I think we should diversify our portfolio because the cryptocurrency market is growing together.
There are many good and worth altcoins out there like ETH, BNB, LTC, EOS ... which are very good and potential coins.