Opinions on diversification

[peter0425]

The difference between investment and gambling is not so significant;

At some point, an investment can be considered gambling and that is when you are investing in newly launched altcoins with little to no information about it. You are already gambling and risking losing all your money. Ofcourse, there will always be risks in investment but investing blindly is just straight up a gamble.

With this said, I think over-diversification is the problem here. Many investors invest on too many altcoins even those of no value. I try to incorporate the quality over quantity mindset.

I see no issue with investing only on bitcoin however if you really want to maximize profits, find at least 2 or 3 altcoins to invest in and make money for a shorter period of time than bitcoin will allow you to. Too much than that and you might drown with losses.

[The Sceptical Chymist]

If diversification is widely accepted among investors, not just in the cryptoindustry but also in the traditional stock market, then it probably shouldn't be abandoned out of hand.

Do you always follow what other do?

OP:

1) This thread should either not be a poll, or you ought to include more than two options in it, because what you have as choices don't fit my thoughts and might not fit others' either.

2) If we're speaking strictly of investments, 'diversification' is meaningless if all you own are cryptocurrencies.  In fact, as much as I'm a fan and supporter of them, I'd never recommend that anyone invest in them and nothing else.  They don't have a long track record, and looking at their history they're probably the most volatile asset class ever, aside from tulips perhaps.  Owning 50 different coins might seem like a diversified portfolio to a lot of people, but that's still the same basket that all your eggs are in--and these are some seriously fragile eggs.

[Darker45]

I'm always in favor of diversification may it be on investment in general or in crypto specifically. Although I am heavily focused on Bitcoin, I also have a handful of altcoins. Even if Bitcoin is the primary crypto asset I'm after, these altcoins have important roles to play. I oftentimes move funds through altcoins. They offer a much cheaper way. Apart from that, these altcoins could also grow in their Bitcoin value every now and then. That makes my Bitcoin holdings increase as well. If you want to move funds privately, there are also altcoins best for that.

Whether we like it or not, Bitcoin doesn't have the best in everything. I hope we remain reasonable and not fanatics.

[Swordsoffreedom]

Whether diversification is good or bad will depend on the assets we want to own. If we already have bitcoin and want to diversify with altcoins then it would be a bad idea because we all know the entire cryptocurrency market depends on bitcoin. If it has problems then the whole market has problems and diversification does not work in this case. But if we use non-crypto assets, it helps us reduce risk significantly and that is the benefit of diversification.

Not to mention, diversification will depend on the amount of capital we have, if our capital is too small, diversification will not bring any benefit.

[shinratensei_]

Honestly, just follow what the big players are doing with their portfolio, diversify big share to BTC and the rest spread across promising alts.
it's gonna be the most safest way to invest yet the profit will be high as well.

but the thing is that, diversification doesn't work if you got small amount of money, it works wonder when you have at least big enough capital to make diversification matter otherwise it'll be an overhead with no benefit whatsoever.

people will have differing opinion to this matter because people have differing capitals.
their approach toward the investment also what makes them have different opinion, some people can afford risky investment, other not.

[SmartGold01]

Diversification is good especially if it is done correctly by acquiring the right coin in our wallet for example if a fellow user wants to do diversification of his investment he could hold Bitcoin, ethereum or Litecoin Matic and so on. These coins are top 10 cryptocurrency but anything less than is not a diversification rather gambling because if invest in a shitcoin it could lead to serious damage where you have already created a channel for your lost and moreover you knows altcoin doesn't maintain its value for long duration of time and can be easily switch off when there seems to be dark in the market. In essence, it's good to only hold bitcoin and ethereum that is only trusted coin which you can hold for long but newly coin is like a trap to quickly lose your investment.

[Marvelockg]

Are you of the opinion that diversification is totally bad? or
The opinion that diversification is good if done correctly?

I wouldn't say that diversification is totally bad or that it's even bad. Everyone has the reason for doing what they choose to and if you diversify in the right way and it works well for you, I don't think it's totally bad.

the options available for someone who wants to diversify his investment could be that you want to buy Bitcoin as your primary asset and then try out other crypto asset with a smaller amount and whatever profit that comes from the altcoin can be reinvested into Bitcoin. If it's that way, it's also good and works well for some people while others might choose to ration thier diversified investment into ratios of maybe 50% in Bitcoin, 30% in a non digital asset and the remaining 20% could go into an altcoin they feel have good prospects. These aren't bad investment strategy and if followed well they can yield good returns but you've got to be careful on the asset you're investing into outside of Bitcoin so you don't scatter your capital all away.

Diversification somehow helps to reduce the extent of your exposure to the risk associated in investing in an asset but can also serve to drain the profit you get from an asset if one asset is doing well while the rest are doing bad. For me, since I'm still at my entry level of Bitcoin accumilation, diversification isn't for me at the moment, maybe in tge future I can conaider it but till I'm a bit comfortable with my Bitcoin investments, i will rather stick to a known and trusted form of investment.

[_BlackStar]

-snip-
What is your opinion on the diversification of crypto investments?

Are you of the opinion that diversification is totally bad? or
The opinion that diversification is good if done correctly?

Diversification is needed in investing - the aim is to minimize risk. There is an investment piece of advice that you need to consider and that is "don't put all your eggs in one basket". If you know what it means - then you might consider that diversification of investment assets is fine as long as you choose assets that really have long-term potential.

If you only believe in bitcoin and not in any altcoin - then you can diversify into physical assets in the form of property, gold and so on. Diversify to minimize risk - that's a smart choice in investing.

[AprilioMP]

Are you of the opinion that diversification is totally bad? or
The opinion that diversification is good if done correctly?

In terms of definition, type and method, diversification is good in my opinion if it is practiced properly. There are many types of investment that I understand. Placing money or using money to buy valuable assets is not good if it is done in just one type of investment with the aim of minimizing the potential risks contained therein.
Of course, this is related to the capital owned by the person. If you only have small capital, it is difficult to manage or practice investment diversification.
If, for example, I have small capital that is not enough to buy several valuable assets, then I will only place it in one type of asset, such as Bitcoin.

[DeathAngel]

Diversification is generally a good idea with crypto assets. Investing in a variety of different cryptocurrencies can help spread the risk & potentially increase the chances of earning returns. By diversifying you can reduce the impact of any individual crypto asset's price volatility on your overall portfolio. It is important to carefully research & select a diverse range of cryptocurrencies with strong fundamentals & potential for growth. Diversification should be accompanied by proper risk management strategies to ensure a balanced & informed investment approach. Something like 50% Bitcoin, 25% Ethereum, 10% Solana & 15% random less known coins could be a good portfolio.

[slaman29]

Wow. I think I have never been quoted so many times on a single post. 13 times in just less than a day, and it's not even such a controversial topic. I am glad to see many others agree diversification is pointless, if not even completely wrong. I personally think it's irresponsible to advice people to do it. Bitcoin is the diversification. Spreading it into alts is gambling. I'm not changing my mind, been here too long to see differently

Wish new posters would actually go up and read old comments or at least on page 1.

[Iranus]

I'm always in favor of diversification may it be on investment in general or in crypto specifically. Although I am heavily focused on Bitcoin, I also have a handful of altcoins. Even if Bitcoin is the primary crypto asset I'm after, these altcoins have important roles to play. I oftentimes move funds through altcoins. They offer a much cheaper way. Apart from that, these altcoins could also grow in their Bitcoin value every now and then. That makes my Bitcoin holdings increase as well. If you want to move funds privately, there are also altcoins best for that.

Whether we like it or not, Bitcoin doesn't have the best in everything. I hope we remain reasonable and not fanatics.

If you diversify with altcoins, this may give you better returns but will not reduce the risk of your portfolio. Because once bitcoin is dumped, you can easily see that no altcoin will be able to increase in price and that is considered a risk in diversifying with altcoins.

The real purpose of diversification is to minimize risk, not just focus on returns. So, I think it is more correct to talk about diversification that we should invest in non-crypto assets. As for our investments in bitcoin and altcoins, we are just trying to optimize returns, IMO. I also invest in altcoins but I don't consider this as diversification because the risk is even higher when investing in altcoins.

[Princess Leah]

The opinion that diversification is good if done correctly?

Yeah on the contrary, I think diversification is not a bad idea even though it concerns Cryptocurrency investment, well If you ask about the best Cryptocurrency to invest on a lot of people would go for Bitcoin, they're right though cause it's actually the best in terms of long-term investment plan.

 However the fact that Bitcoin is the best for investment doesn't make it the only Cryptocurrency for investment, there's still other Alt Cryptocurrencies with good potential like Ethereum, Solana and one could even think of investing of Ton who's blockchain just recently came up but got good potential, However that's not an advice so DYOR on that.

 With that being said, i stand on the opinion that diversification is good if done correctly by investing on the right cryptocurrencies and studying the market before rushing to make investments, whether for short or long-term.

[tabas]

Not to mention, diversification will depend on the amount of capital we have, if our capital is too small, diversification will not bring any benefit.

That's true. Even if you diversify the amount that you have isn't a lot, you won't even feel the volatility of the assets that you have. So, for every move that the market makes, you barely feel it because you don't have a lot. And that makes sense that when the capital that we invest is quite low, returns are quite low too. We're no longer in the era where Bitcoin is too cheap and then fluctuations can be as much as it can be compared to the present time. I won't say that there's no benefit, there is still but it is not that a lot so do not expect that will little capital, an investor will be having great gain, just no.

[stompix]

What is your opinion on the diversification of crypto investments?

Diversifying in crypto is like buying a block of flats close to Central Park and then thinking of spending a few bucks to buy some trailer park in Detroit thinking for sure price will rebounce, it can't go much lower, right!?! Diversifying is about putting your money in things that don't go up and down at the same time and are not influenced by the same things, you buy stocks in air travel, pharmaceuticals, food stuff, you don't buy all of them in oil companies, just because those are different companies it doesn't mean diversification.

Look what happens with our markets, Bitcoin goes up, everything goes up, Bitcoin comes down all alts are in red, how is diversification helping you?

[Marvell1]

If I had a significant amount of money, I would invest and diversify my investments in many different areas to minimize risk and have the opportunity to grow my wealth. But if I don't have a lot of money then I won't diversify and instead I'll choose an asset with the best growth potential to bet on. This will be risky but not a huge amount anyway and if my choices are right I will get a more significant return than diversifying.
Diversification is not a perfect strategy without drawbacks, so whether we decide to use it or not will depend on our personal circumstances.

[Distinctin]

He's correct.

It is a bad idea. Bitcoin always proves to be the best in gains, and sustainability. I insist diversification means buying Bitcoin in addition to funds, stocks. etc.

The purpose of diversification is to prevent you to lost all of your money.

Bitcoin, Ethereum, XRP, Solana, BNB etc are volatile cryptocurrency, so if there's something happened to cryptocurrency, all of your investment will go down.

But, if you diversify your money to stocks, real estate, gold etc, even Bitcoin in bear season, it doesn't make stocks, real estate, gold etc will follow Bitcoin.

No matter how profitable bitcoin or any highly potential investment, diversification is still very much important. You don’t know the future of your investment, so you need to diversify and invest not only in bitcoin or altcoins, but even to other forms of investment that are proven to give high potential returns like real estate or stocks. Although you can decide to DCA more bitcoin to increase your future profits, but come to think of it, having multiple investments will also give you multiple profits, most especially if all of them will come into fruition. Or if one fails and lose your capital, at least you still have other investments that may succeed and give you good returns.

[topbitcoin]

A recent conversation between me and @slaman29 on a topic in this forum(read here) showed me that we hold different opinions on the topic of diversification of investments. What is your opinion on the diversification of crypto investments?

Are you of the opinion that diversification is totally bad? or
The opinion that diversification is good if done correctly?

I am not a fanatic of certain assets and I am a neutral person or take the middle ground in any case, including in determining an investment asset for the future or looking for profit.

Talking about diversification is of course always good, but sometimes it becomes bad depending on what coin assets we buy and how financial management is in shopping for an investment asset in crypto, just like you keep your money in bitcoin by 70% and the rest in ETH I think it's not a problem because both assets have very good fundamentals as investment assets in crypto. but I'm sure regarding the issue of diversification everything has a preference, but I believe that regarding the issue of diversification, everyone has their own preferences in determining their own assets, some crypto tools also have clear projects and are still in the development stage so I think it goes back to their respective points of view in assessing an asset in the crypto market which is relatively many types and fields as the basis for them to operate in their business.

But most importantly in the market, we must have a large stake in bitcoin, because that is far more guarantee for its future as far as I see the development of bitcoin acceptance.

[GeorgeJohn]

A recent conversation between me and @slaman29 on a topic in this forum(read here) showed me that we hold different opinions on the topic of diversification of investments. What is your opinion on the diversification of crypto investments?

Are you of the opinion that diversification is totally bad? or
The opinion that diversification is good if done correctly?

diversification of cryptocurrency investment is the best thing someone who is into cryptocurrency should do because sometimes it helps for acceleration of profit during investment so I know very well some people who spread their investment of cryptocurrency to different coins and when they coins they invested on develop a value in the market the make a lot of profit so it not to concentrate directly on one particular coin but diversify them to different altcoins based on profit making and also experiencing of loss

[The Sceptical Chymist]

Wow. I think I have never been quoted so many times on a single post. 13 times in just less than a day, and it's not even such a controversial topic.

What the hell are you talking about, and what does it have to do with the topic at hand?

I am glad to see many others agree diversification is pointless, if not even completely wrong.

You must be young and probably don't own any other asset class other than crypto.  Even if you own a lot of bitcoin at present, you'll be headed for the poorhouse more likely than not.  Not diversifying is absolutely stupid.  Doing it the right way (with assets that don't correlate with each other) is smart.

Bitcoin is the diversification. Spreading it into alts is gambling.

So one coin in a sea of cryptocurrencies--and excluding stocks, bonds, precious metals, etc., is your idea of diversification?  Don't lead others astray and just please put the keyboard down.