Topic: Is diversification 2 different coins really be good advice 4 Newbies? (Read 142 times)

I think I don talk about this things before and if you go through my profile you go see where I talk about this diversifications. For me as I take see am, e no too good for people wey no know there stances for instance make we see people never dey granded for the industry because if them choose wrongly on what coin they should invest you will see that if those coin sink down automatically their investment don go be that.

For me and how I don see things for the industry, e go better say person choose the right investment to invest otherwise, if you choose carelessly or randomly thinking say diversifying to any coin will increase ones earning na wetin me no fit guaranteed be that oo. Chosing to invest in different coin sometimes can be liken to be a wealth preservation or investment preservation because not all your coin would definitely crashed this depends say if you chose correct ones and not just chosing for chosen sake.

From the way our people don talk here, me self go like chippings say if we they invest make we try make bitcoin as our most priority, for instance, our investment should go about 70 to 80 percentage to bitcoin while the remaining 20 to 30 percentage can likely be invested in altcoin that has some potentials that if even though the bear market comes they won't just crashed that way other newly launched do crashed.

But anyhow, as na translation you carry come here to give us I like am like that so that e go really open our eyes especially our newbie wey no too Sabi road and you too @Chilwell really try to do the translation.

Diversification dey very good because of the advantages wey dey dere. At least if you diversify, you go get some hope if things no go well with the other investment. However, talking about cryptocurrency, na only Bitcoin be the coin wey no go disappoint you so instead to begin go put money into all these other shit coins, e go better to just hodl some amount of bitcoin. Other coins like Ethereum or bnb fit still give hope but no need to diversify into where road no dey. Newbies need to ask questions and do small research wey dem fit do before investing.

Yes, I agree with wetin you just talk as written above, and based on my level of knowledge now, I go say that instead of spreading your funds into a variety of altcoins, the best  way to diversify your funds in crypto is simply by sharing your investment capital into both stable coins (i.e USDT or BUSD) and Bitcoin, because just as the value of Bitcoin always rise and fall, it you could have funds in stablecoins you could buy more Bitcoin when the value is low and sell when it's high and make profit, unlike putting all funds in altcoin which if the value of Bitcoin falls, all other coins follow sorts.

Since you made it clear that it is for a newbie, I wouldn't advice a newbie to diversify into other altcoins, because you are still a newbie with no idea of the crypto market. If you diversify into other altcoins, how will you know when to sell off and make profit,you will end up in a loss. But if it is bitcoin,it is very easy all you need to do is to invest in a long term without panic and you know that at the bull run, they will be good profit for you. Before you go into any investment make sure that you have the proper knowledge and understand that investment. No be to diversify but na to diversify to something that you know the in and out of it. The professionals are diversifying into other altcoins and they are making profit because it already understand the market. Altcoins is a short term investment.

The better you make decision on diversification the better for your safety should anything struct what you have invested and it suffered loss, what are you going to do if that's the only last hope you've got that you invested in, making diversification also helps to increase your sources of income generation and makes it affordable for you to managed them well because money will never be a challenging factor here with you in other to cope well with your business, but before you make the diversification first, try make enough research on what you're considering and know the risk involved before taking the step forward.

Seriously, make pesin invest in different ways na waitin make senses pass becus na one way to minimize risk in business be that, but the truth is that make we look clearly and do better investigation before we try split our money in different ways make thing no kon wast again, so make no go put money in ways that have high risks with just aim diversification, try know that diversification is no necessary when you have assurance on one particularly business and no good alternatives way to put the money.

I discovered one thing in cryptocurrency sector which dey shock me well well, which is the way some people just blindly split their money to accumulate different shitcoins that dey know nothing all about, but just because others dey talk say diversification na better thing, I will say no be all ways.if pesin dey put in money in more risk ways just with name of diversification to minimize is risk na wrong idea. As in cryptocurrency sector, we have Bitcoin and altcoins and you kon Sabi about Bitcoin that it more secure in term of risk but you don't know anything about any others shitcoin or know it take high risk, it will be better to stick with only Bitcoin, I think that will be wise idea.

This reason here na one of the many reasons why i rubbish the idea of investing in different Alticoins just in the name of diversification. There is no withstanding that during a bull market some of these Altcoins actually increased more than the bitcoin price due to hype but even though the difference is not that usually high, they just follow bitcoin trend and increase in similar percentage. So rather than risking your funds on Altcoins that do not have much guarantee of survival why not just stick to bitcoin.

Diversification is done just to avoid huge loss, like when something happens to maybe bitcoin you can run to the other asset but if these diversification is done on Altcoins I think once bitcoin faces any big threat then so the other coins. The best form of diversification is when you invest in a different asset with a good store of value like Gold or you go into other business areas like real estate and it’s likes

Original Topic: Is diversification into different coins really a good advice for Newbies?
Author: 1miau

Most Newbie articles don recommend am: "Diversify! Make you no put all egg 4 one basket! Make you by different coins so your risk go reduce!".
So far, dat go sound good 4 first glance, but e go be true 4 reality? Make we check am:


Diversification wey person go do 4 cryptocurrencies dey applicable?
 
Since I dey reason am say dis advice dey come 4rm di market of traditional investments like stocks, precious metals and co., Make person no say dis strategy make sense well we'll 4 traditional markets. Behind stocks dey are usually large companies dat don proven 2 be established on di market and di risk 4 major loss don dey lower, especially if you don rely 4 top stocks. Even precious metals such as gold and silver are not worthless 4rm 2day to tomorrow, so a big loss is unlikely.

If you take di Coinmarketcap 100 for comparison 2 di S&P 100, you go quickly realize say dere are tons of shitcoins wey no get concept, even if dey 4 TOP 100 out of more dan 10,000 Altcoins. Even 4 TOP 10, at least 50% go be describe as shitcoins, if some of dem are not even scams.
Most of dis project still dey very early stage and even Ethereum no fit sure say deir idea of PoS go really work (as well as plenty oda problems). And Ethereum currently Don dey second place, what’s self-describing 4 di speculativity of lower-placed coins. A loss of more than 90%, as di last 2 years have shown, no dey uncommon. Such a thing go be unrealistic 4 most stocks as well as 4 precious metals or real estate.

Cryptocurrencies no just dey comparable 2 deir structure where di strategy of diversification is used successfully so far, since di structure 4 crypto dey different. Dey dey offer significantly higher returns but also a significantly higher risk.


Watin dey right 4 di past - diversify or not?

For cryptocurrencies in last two years, it’s obvious dat holding a high percentage of Bitcoin na di best decision. In retroperspective, you go always say dat Coin xy did outperform Bitcoin, but wen you analyze most of di known altcoins back in 2017 / 2018, dey lost between 80-95% since all-time high, while Bitcoin don lost only 50% until now. So, in Fiat, dat means you go save more money wen you do investe am solely 4 Bitcoin, namely 250% wit Altcoin of 80% loss and even 1,000% wit Altcoin of 95% loss. If you Don invested $1000 around ATH in 2017 / 2018 you go now have $500 in Bitcoin, but only $200 in Shitcoin A wit loss of 80% and only $50 at Shitcoin B wit loss of 95%. Or di following table:

Coin	Investment around ATH	Loss until now	Remaining value
___________________________________________________	________________________	_________________________	______________________
Bitcoin	1000$	50%	500$
Shitcoin A (let’s say Litecoin, in early 2018 Rank 7)	1000$	80%	200$
Shitcoin B (let’s say NEM, in early 2018 Rank 6)	1000$	95%	50$

So, you go quickly realize dat diversifying of several top 10 coins dey counterproductive compared to investing everything in Bitcoin. Although dere are also cryptocurrencies, dat outperformed Bitcoin, but dat one no affect much highly diversified portfolio. E dey very difficult to impossible to spot dese Altcoins beforehand and very speculative to go for single Altcoin. In addition, dat go be di opposite of diversification.
Holding many different coins and "diversify", resulted in by far bigger losses dan just holding Bitcoin.

I no fit predict say such statistics dey relevant 4 di future, we go wait to see. By comparison, plenty Altcoins don outperforming Bitcoin 4 di last bull market. But it considered as very unlikely, especially due to di large mass of half-baked Altcoins offering disame use-case.


Additional problems 4 diversification: more workload, accidental loss 4 coins and risk 4 downloading malware

A highly diversified portfolio get some more drawdowns:

Each user go need 2 spend a considerable amount 4 work:

• Each Altcoin go dey reviewed 2 see if e dey sustainable and good investment. You go also throw your money to each of di Top 10 coins but dat no be wise decision.
• In general, all your owned Altcoins go be regularly monitored to sell dem on time should problems arise 4 di Altcoin. Dis will mean dat you go invest a lot of time, di more coins you have 4rm different projects.
• You don gain knowledge about the technology 4 each Altcoin, how di project works and create your own wallet 4 storing your Altcoin. Dis go dey very difficult depending on di Altcoin, especially 4 newbies, and in addition put dem at risk of losing di coins by mistakenly improper use. Wen installing various wallets, dere is also risk 4 downloading malware wit all di bad consequences.

If you get only few coins, dese factors dey greatly minimized.


In conclusion, a large part 4 Bitcoin in your portfolio is less speculative, less risky and less work. Di more Altcoins you buy instead and reducing your percentage 4 Bitcoin you hold, di more speculative, riskier and more work your investment you go get.