Topic: Opinions on diversification - page 3. (Read 484 times)

Diversification is not a bad idea in cryptocurrency investments,  expecially for those who started cryptocurrency investments with altcoins (shitcoins),  I think Diversifying for set of people like this to have Bitcoin as investments is very important because bitcoin is better when it comes to reliability than other cryptocurrencies. But for those that are very use to bitcoin I'm not very sure if Diversifying to other cryptocurrency is really necessary because bitcoin is still better, it is better to have Bitcoin as the only investment than having 100 of shitcoins as alternative investments. If one is thinking to have other cryptocurrencies as investments it should be with money that one can really afford to lose.

I agree with Slaman because many people see diversification as holding a lot of altcoins and expect at least one or more to skyrocket and make them millionaires overnight. Due to this idea, most of them go as far as selling their Bitcoin to get some profit which they can use to diversify, which is wrong. Selling off profit from our Bitcoin holding so far is a bad idea because if by chance the purpose of doing that did not yield good results they are at a higher loss. Their fraction of Bitcoin has reduced and the profit they would have used to purchase more Bitcoin if the price later dipped has been wasted on an altcoin that is not worth it.

We often hear people say about not putting our eggs in one basket. And that means a lot and truth. There might be some exception like for Bitcoin and you chose not to diversify in other cryptos for which like the top altcoins and that's IMHO is still a correct strategy.

That's a good example for the richest people in the world. But before they're able to diversify, they have focused to only one of their trades and that's how they have made their richest by staying first to that one very business that they have. And when they're able to breathe and see some opportunities that they can take, that's when they start to diversify in various assets where they distribute their wealth.

Diversification is an important strategy for most people that want to grow their wealth, because the alternative is generally sticking most of your money into one asset. Most people who get rich from putting money into one asset, do it by sheer luck and don't necessarily have a proper strategy, they could just as easily lose all their money if a problem is discovered with that asset. Like buying shares in Enron, or putting all your money into a grand idea that actually turns out to be just a ponzi scheme, things can go against you. If you diversify with stocks, property, precious metals, bonds and assets like cryptocurrency then you have much less chance of all of them going wrong (besides a recession which you have to be ready to accept) as they are in quite different categories.

If you're into any business or investment and have enough experience in doing this over time, you will understand the need for diversification, let's just take a look on the world richest millionaires, they have more than one thing in which they do that source in their money for them, they don't depend on one single entity because they realize on the risk that may involve if the single source have some challenges, instead they diversify in other to maintain their sustainability and increase profitability.

Let's say you got 1 million worth of liquid assets then holding them entirely in crypto or just in Bitcoin is risky, so you should diversify the 1 million into different assets with different risk factors so even if one blows the remaining will save your capital. I am not much of a guy recommend diversify into the cryptos alone, the wild shot will be 10 to 30% of your total crypto portfolio can be taken chance with altcoins but most of them should go into the Bitcoin cause it's proven, less risky compared to altcoins.

Before talking about diversification it will be good to know the kind of investment you wish to diversify into because we all know that crypto investments are very risky such that if you are not observant enough you can run into series of losses or if you don't study the coin that you want to invest on you can end up losing everything within a twinkle of an eye but there are also investments that are even riskier than crypto investments but it is good to diversify on other assets and not just focus all your energy on cryptocurrency but had it been you were specific about the cryptocurrency you are talking about it would have given us an edge to know if it is worth moving out from to invest on other things but if it is about Bitcoin, I would advise that anyone that is hodling Bitcoin and wants to diversify into other projects to forget about diversification and focus more on Bitcoin for long term profits so far as you have a good source of income that comes regularly, you can HODL Bitcoin and become extremely rich in the future.
          I know some people will be suggesting about not putting all one's hope in one thing but not putting one's hope on something depends on how good and promising that asset is because you can even chose to diversify into other things and run into losses when you could have just maintained the asset you have at hand. I believe no one holds gold and decides to diversify into other things so it is for Bitcoin.

Investment diversification is an important economic skill that everyone should have. This is because every business has a certain amount of risks associated with it and it will not be good to put all your eggs in one basket. It is also good to spread your investment to different sectors to enable you to get diverse income streams. Like you said if you diversify your investments correctly, you will benefit from them this is why doing your research before investing is very essential. Don't rely on hearsay or speculations, do your research. After Bitcoin, I have so much interest in real estate and agribusiness.

I am not knowledgeable about altcoins, so I avoid them. Maybe I might decide to invest in them later when I have gained sufficient knowledge. For now, I invest in only Bitcoin because I have basic knowledge about the Bitcoinspace. However, based on speculations or hearsay, investing in altcoins is very profitable but risky.

It is good when done correctly.

For a Bitcoin maximalist, after taking profits then that's the time that he should look for some other investments that will continue to make money.

There is nothing wrong with remaining invested in Bitcoin only. But, there's also nothing wrong if someone is diversifying. We all have different tolerances for risks and techniques when investing.

So, whichever works for you, might not work for the others.

Diversification in itself is a risk management strategy. And every business man knows not to put all their eggs in one basket. You want to have something to fall back on when the all the chips are down. I am of the opinion that diversification is good when done correctly. And by correctly, I mean, you must know what you have and what you want out of your crypto investment before you go ahead. Otherswise, do not diversify without the right knowledge and tools. However, if you diversify into shitcoins and a rug pull happens, you would wish you just invested in only bitcoin even if the market crashed.

It depends on your perspective, capital and seriousness.
I've seen some people say that “don't put all your eggs in one basket” which I guess means that we can't put everything in one aspect or one choice and that can be true. But for me personally especially in investing in crypto then indeed the choice remains only 1 only because after all everything has considerations and I also have that where I realize that my financial condition is very minimal besides that I still feel that when saying about diversification it can be done if indeed we have better finances and it's also not about some crypto assets because I feel that for crypto I will only stay in bitcoin but if I have more money I might do diversification but not in altcoins but in some other investment assets such as gold or maybe real estate so that's what I can call diversification.
But it goes back to each one's perspective and I don't mean to assume other people are wrong and I'm right because of this view of mine.

 

I might be one of those who think that diversification is a good step if done correctly, of course. Because I also diversify in other things. Including investments outside crypto. But I understand that for the long term it is more advisable to invest in crypto only in bitcoin. But in the medium term I think there are many choices we can take even from several altcoins. So diversification here can be done. Of course, there are risks that we must also be prepared to accept. But everything must be done carefully and based on long analysis and not just based on mere speculation.

It's just that this method can only be done if we really have large enough capital to invest in crypto. So it would be a big risk if it was only stored in one basket. but if the capital used is only small capital then I personally probably won't use this diversification.

Diversification of investment is good, you can't just put all your money on one investment and expect a miracle to happen overnight been it crypto or non crypto investment, you really need diversification but how you diversify depend on how much you have to put on those funds, remember that basically how much you put on investment is how you will make back the profits no matter the number on X it makes and you can't just put little money and expect miracle of 1000%.

What the other guy doesn't understand is that he might probably have not really seen where it's possible to make 1000x back then on real altcoins, there were times people were making such return during the ICO times, during the exchange IEOs and also during the IDO but now it's seems memes are the only thing doing such magic and I  not advice anyone to try such investments, they are too risky to do.

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.

I've always believed that everything is good if it's done well. It's the same with diversification. If done correctly, it will do more good than harm.

If you invest all your money in shitcoins to diversify, then in this case, what good can happen? Nothing.

Diversification, like investing in general, should be smart and carefully considered.

If capital permits then diversification would really be always best. Why? you could really be able to have that kind of recovery on the time or moment that the other investment had gone down
then you could really be having such recovery on which this is the benefit or one of the main thing that gives out advantage into those who do make out some diverisfication but of course
it would really be that depending into your financial capacity since not all would really be having such capacity when it comes to capital or simply they dont have the funds on doing so even if they wanted to.

Also, you should really be looking up too into the probability in terms about the risks involved because of the time that you will really be tending to deal up with different options
then you would really be needing to deal up with different level of risks considering that you will really be investing into different projects or coins. So it will really be just
that totally depending on where you do put your money on.

He's correct.


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.

I am of the opinion that diversification is actually good if done the right way. And as such I would say I agree with Slaman29 opinion. If you read through is statement he didn’t meant that diversification generally isn’t bad but buying Altcoins and referring to it as diversification is not. If you read your own explanation when quoting the member you will get that Altcoins buying is pure gamble.

Let’s look at it this way, do you think Altcoins can survive if bitcoin falls today? I don’t think so because a little dump or raise of bitcoin is always followed by Altcoins, with bitcoin you’re almost sure of profits which is not the case with Altcoins, but a collapse of bitcoin will surely means a collapse of the entire market, so why not just take the less risk of investing into bitcoin only.

Diversification is actually a way to cutting your losses and not necessarily maximizing profits, that’s why if you invest into bitcoin a proper diversification will be outside cryptocurrency entirely, such that the two assets aren’t mutually dependent on each other.

Also their is no reason not to buy Altcoins but it is not diversification but rather you are looking for a way to maximize your profit which is risky, you can do that but don’t treat it as investment nor diversification means.

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?