Diversification
Strategic capital allocation across multiple assets to limit specific risks.
Beginner-friendly explanation
Diversification means not putting all your money into one crypto. You buy different assets to avoid losing everything if one drops.
Intermediate-level insight
Diversification involves allocating capital across different asset types or sectors, such as Layer 1s, DeFi, stablecoins, or NFTs. It helps reduce project-specific or sector-specific risk, and better absorb volatility.
Advanced perspective
Effective diversification is based on analyzing asset correlation, relative volatility, and behavior across market cycles. It’s not just about holding many tokens, but about how differently they react under stress. It’s a key tool in risk management and volatility-adjusted return optimization.
Trading Basics
diversification, portfolio, correlation, volatility, risk management, allocation, defensive strategy