Diversification Myths: Why 100 Altcoins Isn't Safer

"Don't put all your eggs in one basket." So you buy 50 different AI tokens. You feel safe. Then Bitcoin drops 5%, and your entire portfolio drops 15%. What happened?

Correlation Risk

In crypto, correlations approach 1.0 during crashes. Everything creates a singular asset class.

• Buying PEPE, SHIB, and DOGE is not diversification. It's just leveraging the "Meme" sector.

True Diversification

True diversification requires assets that have Low or Negative correlation.

1. Stablecoin Yield Farming: (Zero correlation to price).
2. Market Neutral Strategies: Grid Bots that profit from volatility, not direction.
3. Short Strategies: Holding a bot that shorts overbought assets balances your long-term holds.

Concentration Builds Wealth, Diversification Preserves It

Don't over-diversify when your account is small. You dilute your best ideas. Focus on 3-5 high conviction plays, and use diversification strategies only to protect capital once you have made it.