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.
- Stablecoin Yield Farming: (Zero correlation to price).
- Market Neutral Strategies: Grid Bots that profit from volatility, not direction.
- 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.
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