The Importance of Income Diversification for Crypto Traders

[AmoreJaz]

If you are able to learn well and have knowledge about crypto trading, you defend on it because many people are depending on it to live as they have no alternative.
Although, it will be very good if you have physical business as backup, but it also involves risk which is a bit lesser than the crypto trading, but if you have the knowledge, make it your main source and you will earn from trading if you are not greedy.

Having knowledge is of course very important to be able to get a good income from trading, because it is impossible to get good results in trading without good knowledge about trading and if we choose to persist in trading because it is difficult to get income from other sources. Another thing, of course, is that we have to have good knowledge about trading so that we can continue to make profits from trading and when we can get profits, it would be better if we used these profits to try a physical business, which of course we can master this well so that we can run it. Of course, greed is very detrimental to us in trading, so it is important for us to be able to control our emotions when trading so as not to be greedy.

If you are exploring different projects when it comes to trading, then, it is like you need to learn everyday. As each project is unique from each other, you need to understand what's going on with their actual developments so you know how to attack in the trading market.

Trading is one tedious job. So if you are not emotionally and financially prepared, better not put your hard-earned money into this activity. Maybe, look for other tangible assets to invest with if you have no luxury of time on your plate.

[Peanutswar]

Since the retracement of Bitcoin, the market has become boring. Sometimes, the direction of Bitcoin is unclear. For example, the price action of Bitcoin is actually confusing. I have learned one thing in these recent days: As a crypto trader, do not rely on trading as your only source of income. It is good to have another source of income like real estate, staking, crypto jobs, mining,  and other legitimate sources of income. If I say that I will force trade now, it can end up in a loss.

The market will not become healthy if there's no retracement this is to check where the market can hold and soar if you are active in trading with the use of the indicators and signals even though it's not giving a hundred percent price movement still there's a glimpse you can see what are the possible price action, that's why knowing with technical analysis might save you from loss and lessen the risk.
Having different jobs is ideal to make sure you will grab the opportunity in crypto like buying the dips and holding wait for the ATH but recently there are a lot of trend right now in the crypto space that offer a job so you can enjoy crypto while earning.

[JeffBrad12]

Diversification assets into multiple baskets ideally sounds like picking fruit from many trees but is not as easy and sweet as expected. Some assets are no longer capable of price reversals, some assets are only good if they are hyped, and all of them will pose a greater risk of loss when losing interest in the market. I'm not the kind of person who likes to divide treasures into parts, as you said, it would just be a pile of useless trash.

yeah, diversification isn't all rainbow and adhere to our expectation, most people that over diversify usually are the amateur and beginner who thinks diversifying into more shitcoin means less risk, well the bad news is, that's not true, just packing various shitcoin doesn't magically turn it into blue chip coin.

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

just compare BTC graph below


to ETH, BNB and SOL

almost looks identical

[fuguebtc]

Diversification assets into multiple baskets ideally sounds like picking fruit from many trees but is not as easy and sweet as expected. Some assets are no longer capable of price reversals, some assets are only good if they are hyped, and all of them will pose a greater risk of loss when losing interest in the market. I'm not the kind of person who likes to divide treasures into parts, as you said, it would just be a pile of useless trash.

yeah, diversification isn't all rainbow and adhere to our expectation, most people that over diversify usually are the amateur and beginner who thinks diversifying into more shitcoin means less risk, well the bad news is, that's not true, just packing various shitcoin doesn't magically turn it into blue chip coin.

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

What if your only asset is bitcoin or any other blue chip coin and we are in a bear market? Why do we keep locking ourselves into the crypto industry and thinking that diversification means investing in a few altcoins? Why don't we divide our capital and invest in assets such as stocks, gold or businesses? Isn't that diversification?

People just follow the cryptocurrency market and say that diversification is useless, while the concept of diversification is most true when we invest in unrelated assets. You put all your assets in the cryptocurrency market and if it crashes, you lose everything. So I wouldn't call it diversification.

[$weetne$$]

in my book, diversification only work if I want to invest and mantain risk, but also want to try investing into high risk coin some time, then it works, other than that, just a waste of time since BTC perform better than majority of other coin anyway, no point diversifying. this even more apparent when most of coin also just simply follow BTC price like you can diversify to other 5 top coin and the result more likely will be the same as holding just BTC  .

Why alot of individuals prefer to invest in altcoins as a way of diversifying is as they see they can make more profits when they invest in altcoins. They do not forget to invest in Bitcoin but diversify with altcoins. $500 invested in an altcoin can give you more profit than when you invest that same $500 in Bitcoin. Investing in fundamental altcoins that is the secret and not investing in random shitcoin or memecoins. All cryptocurrency moves alike but they do not give them same profit. Bitcoin can increase by 100% but altcoins will increase by 500% percent during the same time because they have low market capitalization and a lot of investors are looking for altcoins that can give them profits to invest into. They do not mind if they lose on various attempts when they can finally get a big profits at the end.

[RockBell]

Why alot of individuals prefer to invest in altcoins as a way of diversifying is as they see they can make more profits when they invest in altcoins. They do not forget to invest in Bitcoin but diversify with altcoins. $500 invested in an altcoin can give you more profit than when you invest that same $500 in Bitcoin. Investing in fundamental altcoins that is the secret and not investing in random shitcoin or memecoins. All cryptocurrency moves alike but they do not give them same profit. Bitcoin can increase by 100% but altcoins will increase by 500% percent during the same time because they have low market capitalization and a lot of investors are looking for altcoins that can give them profits to invest into. They do not mind if they lose on various attempts when they can finally get a big profits at the end.

The money you invest with determines the return you will earn that is the number one rule when investing in bitcoin. The sooner people grasp how bitcoin works, the better because not everyone understands this simple theory. The earlier you learn how bitcoin works, the better. Because, according to the basic analogy you provided, investing $500 amounts to nothing when investing in bitcoin, but this $500 is invested in something with a higher chance of profit than investing in bitcoin. The only reason they will advice you to invest in bitcoin is because it is safer to invest because your money will be in good hands, compare to other altcoins that can crash due to the condition of the market, only few projects can survive, but if you want to take risk then you can actually give altcoin a trail.

[tygeade]

The market will not become healthy if there's no retracement this is to check where the market can hold and soar if you are active in trading with the use of the indicators and signals even though it's not giving a hundred percent price movement still there's a glimpse you can see what are the possible price action, that's why knowing with technical analysis might save you from loss and lessen the risk.
Having different jobs is ideal to make sure you will grab the opportunity in crypto like buying the dips and holding wait for the ATH but recently there are a lot of trend right now in the crypto space that offer a job so you can enjoy crypto while earning.

Retracement or basically a correction to what we are having right now, the reality is that we do not "need" it, it is not bad when it happens and anyone who knows the market will know that it happens here and there, so it is not a big deal at all. But it is not a must at all, we can have a growth without a retracement as well, it doesn't really considered to be something all that troubling.

We need to consider how things aren't always what they look like, sometimes it can look one way and be something else, so we need to be careful about it, so I agree that technical analysis could be the most important key factor here, if you know TA then you are not going to act like everyone in the market, you are going to be confident and seeing what could be done and what is the real situation and could make moves based on that.

[TheUltraElite]

I always advice newbies to keep bitcoin as a side hustle, continue their day job or get one if they are still a student and just newly entering crypto.

Keeping the traditional assets at hand is no harm but only better. Crypto trading was easier for me to cope up with because I had a background of stocks and this can help former stock investors to enter crypto too.

Diversifying is never a bad thing but altcoins should be avoided, in other words, the only crypto in the folio should be bitcoin.

Again it does not mean things other than trading should be given importance to - staking is not something I advice, neither is mining unless you have very cheap electricity and have the rigs in place.

[EarnOnVictor]

Since the retracement of Bitcoin, the market has become boring. Sometimes, the direction of Bitcoin is unclear. For example, the price action of Bitcoin is actually confusing. I have learned one thing in these recent days: As a crypto trader, do not rely on trading as your only source of income. It is good to have another source of income like real estate, staking, crypto jobs, mining,  and other legitimate sources of income. If I say that I will force trade now, it can end up in a loss.

What is your take on this?

There is no other take that will be reasonable against investment diversification and it's only a fool that will argue otherwise. It is like having the factors of safety, I've never seen the disadvantage of that. However, you have to learn and fully know what you are committing your money to and not just dabble into it because you know people are doing it, fraud and losses are in all investments. Nevertheless, it sounds like a good plan if you can divide your money into about 5-10 uneven parts and invest them wisely in projects, businesses and properties.

If you noticed, I mentioned the "uneven parts," this is because what you are investing the money into will always have its encouraging and discouraging parts, so we should learn the level of risk and the plausibility of dealing with them and earning from them. This is what will help you to know the worth of the portion you are coming into each of them. Even as lousy as people are about crypto, wise investors recently warned that you should not invest more than 10% of your worth (affordability). That is the worst case because it is still a new project that people are hyping. You can invest more in the more feasible ones like stocks, indices and properties that will hardly fail you.