Opinions on diversification | Bitcointalksearch.org

Dr.Bitcoin_Strange

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Quote from: Zoomic on July 26, 2024, 02:47:02 PM

Quote from: Dr.Bitcoin_Strange on July 26, 2024, 12:16:33 PM

There's a saying that we should not put all eggs in one basket which could be risky. The decision of diversifying one's investment and still putting all your capital into different crypto is same things as having all your investment still in one basket, despite that you are investing on different altcoins.

It's not bad to actually invest in other altcoins after buying Bitcoin but one need to understand the risk in some altcoins before investing in it. Also, if you want to diversify your investment, invest in other non crypto assets.

My idea of diversification has always been to invest in some digital assets like crypto and extend too to some physical assets like real estates, gold, commodities and many others. If anyone pools all his resources to just digital assets of different classes, then I do not classify such as diversification of investments because same basket carries all of them.

As long as there is enough capital to fund the investments and there are good strategies in place to ensure that the different investments generate returns at the right time or one of the investments sustains the other investment including the investor when the other investment suffers losses, then diversification is a better option.

Well, judging by what I earlier said, I think we are still on the same page here. Some persons thinks that diversifying their investment is by investing in different alt coin. Although it could also be seen as diversifying in crypto but not in general investment. When someone decides to diversify in their general investment, it means they have invested in crypto and other real world asset like stock, bonds, shares, real estate, etc.

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Quote from: pooya87 on July 26, 2024, 02:52:58 AM

When you have money and want to invest it, you buy independent assets so that if one dumped/crashed others don't follow.

Can you say this is true about altcoins? When the answer is no, then buying altcoins is not a diversification. It is giving the investor the false sense of diversification because whenever bitcoin makes a move, altcoins get dumped so you really aren't receiving the benefits of diversification.

The best diversification is consideration of individual risk. If an investor thinks that investing in an altcoin would keep him in a safer monetary position, then the idea is wrong. Because altcoins attract more risk diversification in the right sense is built on the idea of mitigating the level of risk. When the opposite is happening then it is not diversification anymore. Most investors always have the mindset that investing in several assets without considering the risk level is a way for diversification. Financial goals and duration of investment can also be considered when diversifying.

However, there are other forms of investment that an investor can diversify into. It must not be an alternate to Bitcoin since the risk is higher there. There is real estate, and some stock commodities that we can put our money into.

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The idea of diversification is rational because it also means diversification of risk. Going all-in is always a very risky move, so it makes sense that it's better to diversify one's investments and resources, just in case this one thing doesn't work out.
That being said, it is not necessary to diversify within cryptos. I believe that Bitcoin is the safest crypto investment, so buying other coins is unlikely to decrease the risk. But, say, keeping some funds in gold, real estate, or perhaps even in fairly strong fiat on a deposit account can all help to diversify and make sure a person is not left with nothing. Just in case Bitcoin doesn't recover from another bear market one day. Or something renders it useless.

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Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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?

You could diversify in crypto investments by allocating maximum funds into bitcoin and a minimal amount into potential altcoins. However, since it's quite difficult to find the right altcoins most especially if we are talking about those new altcoins in the market, I suggest you just stick into bitcoin and do DCA every time you have spare money and add more bitcoin into your portfolio. The more bitcoin you buy and hold, the more massive your profits you will come to reap in the future. Of course, patience is highly a must.

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Quote from: Franctoshi on July 26, 2024, 03:36:08 PM

You don't have to rely on the value of one coin to profit, because if you have ever witnessed an Altcoin season before you would understand better that the coins you would hope on to profit the most from ,you would even will disappoint seeing then drop in value, whereas the least expected coins will even perform greatly, therefore diversification is thus a good one as its give you and edge over your investment portfolio than just relying on one particular coin to profit, secondly during Altcoin season, all do not rise at same time, so when you diversified, it will give you the chance to take profits and possibly move them to coins that has not yes started pumping.

But when it comes to the long term and risk management when separating with our minimal money power, it will actually interfere with your focus when in an investment.
We can see that in the end the risk of altcoins is much greater than bitcoin for the long term and I think we have to realize that the possibility is not only based on a positive thing like profit but we have to look at both sides where risks must also be considered.

So in this case disverification when it is only in the scope of crypto in my opinion is not right because in the end there is already something good enough for the long term, namely bitcoin so why impose it on altcoins whose risks are clearly greater in terms of losses. because after all when we talk about investment of course the long term is the most appropriate choice and bitcoin is the most feasible for that.

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Quote from: Swordsoffreedom on July 24, 2024, 10:40:34 PM

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.

I think diversification itself or in general is good but it can only be bad or even other good things in this world can turn into bad on the wrong hands. Having a BTC first is a good thing actually before others. It was like a base of our investment due to its robustness. Altcoins are more than one so we must not generalize them and say that they are bad but some of them still have a good potential as they have unique features than in BTC.

This makes them to move on their own sometimes, so it's also a good idea to have them, so that we can still earn continuously if in case BTC is in a bad mood. No one says that we can only diversify on the same field but you are correct, it is also good to diversify on other fields as well. Again, choosing the right asset is still a must, as there are also bad and scam ones on them.

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You don't have to rely on the value of one coin to profit, because if you have ever witnessed an Altcoin season before you would understand better that the coins you would hope on to profit the most from ,you would even will disappoint seeing then drop in value, whereas the least expected coins will even perform greatly, therefore diversification is thus a good one as its give you and edge over your investment portfolio than just relying on one particular coin to profit, secondly during Altcoin season, all do not rise at same time, so when you diversified, it will give you the chance to take profits and possibly move them to coins that has not yes started pumping.

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Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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?

Actually I don't see anything wrong with diversification of investment and we also need to know what we are doing so that we are not going to make mistakes to have invested out funds in the wrong projects. It is quite good we have a plan and we are always doing survey or research about the next cryptocurrency projects we want to invest our in so that it is not going to affect us later after when we have made the choice and have invested our funds. Since this is also a financial decision, it is good we know what we are doing and also always planning well so that we don't have to keep regretting after every wrong decisions we have made concerning our investments strategies.

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Quote from: pooya87 on July 26, 2024, 02:52:58 AM

When you have money and want to invest it, you buy independent assets so that if one dumped/crashed others don't follow.

Can you say this is true about altcoins? When the answer is no, then buying altcoins is not a diversification. It is giving the investor the false sense of diversification because whenever bitcoin makes a move, altcoins get dumped so you really aren't receiving the benefits of diversification.

I think diversification is important in cryptocurrency because cryptocurrency is all about calculated risks. And you should not keep you all eggs in the same tray. You should diversify that and when you will see after a long time ,you will get Max profit from 10 percent investments and less profit you will from 20 percent of the investments you did. And you will get profit from 30 percent investments you did and may be or may be you will get profit from remaining part of Investment but more chances you will get no return on 40 percent of investments but if you are lucky person you can get success in all types of investments because luck is very important in every investment of life. In my opinion, cryptocurrency is best to invest.

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Quote from: Dr.Bitcoin_Strange on July 26, 2024, 12:16:33 PM

There's a saying that we should not put all eggs in one basket which could be risky. The decision of diversifying one's investment and still putting all your capital into different crypto is same things as having all your investment still in one basket, despite that you are investing on different altcoins.

It's not bad to actually invest in other altcoins after buying Bitcoin but one need to understand the risk in some altcoins before investing in it. Also, if you want to diversify your investment, invest in other non crypto assets.

My idea of diversification has always been to invest in some digital assets like crypto and extend too to some physical assets like real estates, gold, commodities and many others. If anyone pools all his resources to just digital assets of different classes, then I do not classify such as diversification of investments because same basket carries all of them.

As long as there is enough capital to fund the investments and there are good strategies in place to ensure that the different investments generate returns at the right time or one of the investments sustains the other investment including the investor when the other investment suffers losses, then diversification is a better option.

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Quote from: CryptoHeadlineNews on July 26, 2024, 12:58:29 PM

When it comes to crypto investment, the issue of diversification being either bad or good can only be determined base on the kind of crypto a person invest into, because if a person diversified his crypto assets to just only into Bitcoin, Solana and stable coins such as USDC and USDT, then that can be regarded as a good portfolio for diversification, whereas if he invest in Bitcoin and whole lots of shitcoins and newly launched coins which has got no reputation, then such investor stands a high chance of having his funds being liquidified if he is unlucky to buy into a scam project.

So in conclusion, diversification of crypto asset is good, but what asset you diversify into is what matters most.

Exactly, diversification is highly recommended to have various assets from the portfolio and it is recommended that we have USDT stable coins to make a profit from inflation that occurs in other local currencies, USDT can also be used as investment capital to buy BTC when the market is bearish and we will have the opportunity to make more profits. high to hold btc assets in the long term.

However, apart from diversifying crypto assets, you must have other assets such as gold, property to stabilize your assets. The goal is that we don't need to exchange crypto assets if we don't need emergency funds and we can exchange gold for emergency needs and buy again when we make a profit from crypto investments.

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Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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

When it comes to crypto investment, the issue of diversification being either bad or good can only be determined base on the kind of crypto a person invest into, because if a person diversified his crypto assets to just only into Bitcoin, Solana and stable coins such as USDC and USDT, then that can be regarded as a good portfolio for diversification, whereas if he invest in Bitcoin and whole lots of shitcoins and newly launched coins which has got no reputation, then such investor stands a high chance of having his funds being liquidified if he is unlucky to buy into a scam project.

So in conclusion, diversification of crypto asset is good, but what asset you diversify into is what matters most.

Dr.Bitcoin_Strange

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There's a saying that we should not put all eggs in one basket which could be risky. The decision of diversifying one's investment and still putting all your capital into different crypto is same things as having all your investment still in one basket, despite that you are investing on different altcoins.

It's not bad to actually invest in other altcoins after buying Bitcoin but one need to understand the risk in some altcoins before investing in it. Also, if you want to diversify your investment, invest in other non crypto assets.

pooya87

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When you have money and want to invest it, you buy independent assets so that if one dumped/crashed others don't follow.

Can you say this is true about altcoins? When the answer is no, then buying altcoins is not a diversification. It is giving the investor the false sense of diversification because whenever bitcoin makes a move, altcoins get dumped so you really aren't receiving the benefits of diversification.

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Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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?

You need to have a few assests.

If you can mine scrypt at a profit you should mine it and set up trade ladders with both the doge and ltc you mine.

you likely can’t mine btc at a profit so dca it.

you do not need much else which means 3 coins doge+ltc and btc.

your btc is always stack and hold.

you need cash to some degree
maybe gold
maybe silver
a few stocks
maybe real estate

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Quote from: Marvelockg on July 25, 2024, 03:34:32 AM

Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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.

Diversification is always been best and not considered to be bad, it would really be just that depending on how you would really be able to handle out such risks because not all would really be having that courage or having that dedication whether they would really be able to bare up with the risks involved or not because there are ones who do really want with those less risks and this is why it would be situational on this aspect.
Splitting up on different investment will really be that having that kind of advantage considering that you could be able to profit in different source in compared into those who do focus on a single point.
There are ones who do have that kind of courage and this is why they would really be coming up with this kind option but of course opportunity and advantage would really be there.

Somehow those people who do really love on trying out to diversify but since they dont really have the money or capital that they could be able to put in, this is why they do really missed out this kind of opportunity
on which this is something not that new. To thsoe who do have that sufficient capital or funds will really be always having that advantage. If you are someone who do have that limited then try out to compound
your profits and make your capital something more bigger and on the moment that you can diversify then this is the moment that you could be able to do it.

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Only diversification? In cryptocurrencies? You consider that as a STRATEGY?

I'm all for spreading your bets, but without deep knowledge, it's not diversification, it's desperation. It's like blind darting at a board you cannot even see. You're not reducing risk, you're just diluting your potential returns

The world of cryptocurrencies is chaotic. You have to grasp the terrain, the players, the fundamental tech. You have to be able to tell serious ventures with promise from scammers and shitcoins that are only noise. Diversification without understanding is garbage. Indeed, you could be lucky for a time but finally you will burn out. And occasionally, even shitcoins can make you quite profitable

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Quote from: The Sceptical Chymist on July 24, 2024, 09:24:23 PM

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.

I have edited the poll to have another option for persons like you with other POV.

Quote from: slaman29 on July 25, 2024, 06:02:11 AM

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 just had to bring this topic here because I know that people have different opinions on this.

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Quote from: slaman29 on July 25, 2024, 06:02:11 AM

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?

Quote from: slaman29 on July 25, 2024, 06:02:11 AM

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.

Quote from: slaman29 on July 25, 2024, 06:02:11 AM

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.

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Quote from: Rruchi man on July 24, 2024, 08:47:03 AM

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

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