.

[Saidasun]

Fair point, i was assuming you focus on market cap in last few years. ADA have weekly technical update, although AFAIK it's not very transparent. BNB is only popular because it's owned by Binance. Another altcoin such as Monero still have active development with good transparancy.

My point only stands if I'm correct and it would just be speculation from both of us. ADA and BNB might be around in 5 years and might be worth something but just because a project is receiving weekly or even daily updates in the early days does not mean much that is usually what I would call the honeymoon period where the developers are really excited and they think they are going to earn a lot of money and when it comes to two years later and their coin is still worth nothing that is when they drop support and move onto the next idea.

Transparency in cryptocurrencies is very important imo and a coin that is not being transparent will never make it big. I would say transparency is a prerequisite to success in cryptocurrency and that is why the Blockchain is such a big hit among Bitcoin supporters and you can check the very last line of code of Bitcoin and what the developers are adding on a weekly basis if you wanted too.

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[hatshepsut93]

and it's better to choose coins from top 10 for the majority of your portfolio and from top 20 as a smaller part.

Even that can be dangerous if we look back what coins were in the TOP 10/20 just a few years ago and where they are now.

Of course it's dangerous, it's extremely dangerous in fact. I didn't say that it's safe and foolproof way to make money. But compared to investing in obscure shitcoins, it's safer, because shitcoins from top-1000 and below are even more riskier and have very short lifespans and could crash to nearly zero in a few hours. Which is why I want to stress for newbies again that investing in Bitcoin is both simpler and more profitable. If you chase those stupid x100 pumpcoins, you will get broke from all the dumps, but by holding Bitcoin you will make decent gains in a few years without any effort.

[aoluain]

and it's better to choose coins from top 10 for the majority of your portfolio and from top 20 as a smaller part.

Even that can be dangerous if we look back what coins were in the TOP 10/20 just a few years ago and where they are now.

- Litecoin used to be a Top 5 coin. It's now in the 13th place.
- Steller is slowly dropping out of the Top 20.
- Monero and EOS have already dropped out.
- I remember that NEO was in the Top 10 a few years ago. It's sitting on #41 today.
- Iota, Dash, DigiByte, Verge have it even worse.

I'm not reading any further, this post sums it up for me, and its something I posted before
about "the current flavour". Altcoins are really temporary, they spend a time being the focus
of attention then to be replaced by a newer project.

I de-diversified my crypto portfolio about 2 years ago I think, almost everything got
liquidated back into Bitcoin.

Diversification as @o_e_l_e_o posted is in many different areas, Crypto, Property, precious metals,
stocks & bonds, Art, Cars, collectables.

[boyptc]

Diversification is protection against ignorance. It makes little sense if you know what you are doing.

although i am not a big fan of warren buffet, i agree with him on this one. if you really get what bitcoin is, i don't think you should diversify in anything else. and i am not only talking about other "cryptocurrencies", also about other "investments". imo everything else goes to zero compared to bitcoin over a long enough period of time

Yes, diversification isn't just all about spreading your money into altcoins after you've bought bitcoin. There is also another consideration that you must do.

Just because someone said that you have to diversify then you have to do just as he said. What if that person doesn't have bitcoin and you've got it already and you're in a better situation? sometimes there really is a need to realize and consider first the suggestion of others because you probably are in a better situation than the person that suggests you what you must do.

[Husires]

Just wondering, why only BTC and ETH? Few altcoin such as BNB and ADA are currently popular and have high market cap.

BNB is not an altcoin/ It's a gambling, and if you like gambling, go to Las Vegas.

ADA and others fall into the same category, so it is better not to invest in a lot of the same category.

Smart contract have lots of application, it's not limited on token. Simply saying "Smart contract" on your class is more accurate.

I mean tokens, but I added the word smart contracts to fit the content of the article.

Buying any altcoin does not mean diversification because they are all in the same category - cryptocurrencies. Why take the risk with a random altcoin which is far more likely to drop to zero than it is to make any real gains, when you can just stick to bitcoin. If bitcoin dies, your altcoin dies too. If your altcoin dies, bitcoin doesn't care.

Not all of them are in the same category, if we ignore the central nature of stablecoins, they do not take the same approach as Bitcoin.
Some coins take a different approach to Bitcoin in times of stability.

[jinneas]

I think that diversified investment in cryptocurrency will not reduce the volatility of the crypto market, nor will it provide liquidity for the currency. Most crypto assets just follow the trajectory of Bitcoin. If the price of Bitcoin rises, altcoins will generally do the same, on the contrary, the price of altcoins will fall with the fall of Bitcoin prices. Therefore, a diversified investment portfolio will not have too much impact to reduce the risk of market volatility.

[Liamttw]

Encryption portfolio diversification is the act of investing funds in different encryption projects in one or more projects. Implementing a diversification strategy can also help you achieve the best return. It is the best way to reduce risk and avoid the risks we know. Diversification can be a good foundation for providing liquidity and more income, and it can also help reduce the risk of market volatility.

[o_e_l_e_o]

Sorry to say this but I can not accept most of your words. Putting all your money into one coin whether it is bitcoin or some other crypto is the worse case  scenario for any investor. Please, read the following article to learn how  "portfolio diversification  minimizes the overall risk of the portfolio."

At no point did I suggest that anyone should put all their money in to bitcoin. What I said was that spreading the money you allocate to cryptocurrency among different coins is not diversifying your portfolio.

That article you linked agrees with what I'm saying. It says "Portfolio diversification is the process of investing your money in different asset classes". Altcoins are not a different asset class. They are all cryptocurrencies and they all follow bitcoin, so do nothing to protect your portfolio against a bitcoin bear market.

If you want to buy altcoins to chase some pump and dump profits, then by all means go ahead, but that isn't diversifying - that is gambling. Diversifying your portfolio means investing in different asset classes - stocks, bonds, commodities, real estate, etc.

[o_e_l_e_o]

As you can see diversifying crypto portfolio for them means investing in deferent crypto assets  which are much wider than just a  bitcoin.

But let's take a look at the returns on those coins, in terms of BTC:

EOS - down 95% from peak
NEO - down 95% from peak
XLM - down 90% from peak
OMG - down 95% from peak
XRP - down 95% from peak
BCH - down 95% from peak
ARK - down 97% from peak
ZEC - down 98% from peak

Now, we obviously don't know exactly how much of each coin they are holding or when exactly they bought it, but in almost all scenarios buying these coins lost them money compared to buying bitcoin alone and did not reduce the risk of their portfolio compared to buying bitcoin alone. If bitcoin crashes, these altcoins will all crash even more too.

The whole point of diversifying is to reduce your risk of losing too much money if an asset you are heavily invested in crashes. When all altcoins crash together, then buying them does nothing to reduce that risk.

[Caldear]

Diversification is a good method. If you put all your eggs in one basket, but it performs poorly, then everything will be affected. The same goes for investing in currencies. If you invest all of your funds in a currency, you have to bear all risks when there are fluctuations. If you choose a variety of investments, you can alleviate the risks at the same time. You must have a deep understanding of the content related to the cryptocurrency you are researching, and pay close attention to the vested interests such as market manipulators.

[osasshem]

Investing into the crypto world is a very nice decision to make, but there should also be caution when taking some actions. As said by OP, the main crypto coins in the market which are Bitcoin and Etherium are the top and should be given a more percentage when investing into crypto currency. This is because they are more reliable and the market moves with the effect acting on these two assets. There are other coins out there that has good features too, that is why you'll need to make a personal research so as to have an edge /knowledge on what you are putting your money into.
Diversification is a very use method used in crypto world, the doesn't mean you sell Bitcoin to buy altcoins, it is better to sell other coins to purchase more Bitcoin, cause the value and move of Bitcoin affects the market.
Let's diversify our assets carefully and enjoy our actions later.

[suzanne5223]

Investing into the crypto world is a very nice decision to make, but there should also be caution when taking some actions. As said by OP, the main crypto coins in the market which are Bitcoin and Etherium are the top and should be given a more percentage when investing into crypto currency. This is because they are more reliable and the market moves with the effect acting on these two assets. There are other coins out there that has good features too, that is why you'll need to make a personal research so as to have an edge /knowledge on what you are putting your money into.
Diversification is a very use method used in crypto world, the doesn't mean you sell Bitcoin to buy altcoins, it is better to sell other coins to purchase more Bitcoin, cause the value and move of Bitcoin affects the market.
Let's diversify our assets carefully and enjoy our actions later.

Crypto investment is the future of all investment which is the reason why we have the NFT, DeFi and more to come in the future joining the crypto market but every individual need to understand the area they can fill in and the same thing goes for portfolio diversification treated on this thread and just as you said people need to be cautious when taking some actions.
I want every newbie reading this to understand that a portfolio is not easy as people think, it is not for everybody and the last time I check it was only for individuals that have adequate knowledge in portfolio management to avoid excess loss through portfolio diversification.

Every investment tip in crypto has its con and pro.

[KevinRosa]

Although it is impossible to eliminate all risks. It can be adjusted according to the individual's specific investment goals. Diversified investment portfolios and asset allocation are inseparable.

Under normal circumstances, maximizing returns also involves time frame, risk tolerance, and macroeconomic conditions.

The trends of diversified asset classes are often different. Following market conditions, a certain asset may underperform another asset class if it performs well.

I don't think it is necessary to choose different opposing categories in order to achieve diversified portfolio investment, as that may produce poor results.