Portfolio Diversification
Spreading investments across different crypto assets and categories to reduce overall risk.
Explained Simply
Diversification means not putting all your eggs in one basket. In crypto, this can mean holding a mix of Bitcoin, Ethereum, altcoins, and stablecoins — or spreading across different sectors like DeFi, infrastructure, and Layer 2s. Diversification reduces the impact of any single asset crashing. However, during severe market downturns, most crypto assets tend to fall together, limiting diversification benefits within crypto alone. Some investors also diversify across asset classes (stocks, bonds, real estate, and crypto).
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This content is for educational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for advice specific to your situation.