Diversify Or Not? Crypto Strategy Thoughts by Crypto Gordon

By BitcoinGordon | BitcoinGordon | 26 Feb 2020


In traditional investments, whether a mutual fund, CD's, spot trading or other, we are told that it is smart to diversify. Spreading one's assets across multiple well-researched speculative opportunities is said to protect one's portfolio from weaknesses and risks in a certain area.

This isn't a long topic, but one that I think most crypto traders or hodlers should consider.

In crypto, diversity may be it's own form of risk just as much as placing all of one's eggs in a single basket. Crypto has a decade under it's belt, but it has only been a few years that account for any form of true spot trading. The exchanges that most people are aware of carry an extremely wide range of assets, and since there are multiple pairings with the larger coins, like BTC, ETH, USDT, one can imagine the options are vast.

But, the entire market tends to center around BTC price and volume. The top ranking coins tend to respond the most favorably to BTC moves, and the mid to small cap coins get into risky territory often. One can ask, where should they set their risk versus reward?

Forget about profit percentage for a moment, and just consider how easy it is to get stuck in a position with a smaller coin. And, let's face it, if it isn't ETH, LTC, XRP, XLM or a few others, who knows if it is done hitting the bottom? Great coins are sitting below the ocean floor after 4 weeks of bullish activity. So, is it truly better to diversify and risk sitting in a coin for 1 month, 1 year? Maybe more?

It is something to consider.

I've played with numerous strategies, and whoever guesses the next round correctly will be seen as the expert. But, the truth is none of us really know.

It could be just as intelligent to place all trades between Bitcoin and Ether as it could be to trade BNB, BCH and LTC against USDT. 

This is just food for thought. Consider it and DYOR. Truth is, there are great coin projects out there. Some like items like ADA, XRP, NANO, BAT, FTM and the list goes on. There is merit to all. But, when the market shifts every one of them can get their teeth kicked in by Bitcoin.

Keep your eyes opened and consider today whether your strategy is working, or whether it needs an adjustment.

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BitcoinGordon
BitcoinGordon

Hi! I'm Gordon Freeman (I hear they made a likeness of me in some video game... totally unrelated... or...).


BitcoinGordon
BitcoinGordon

Welcome! This is my blog for all things crypto, from my day trading and tutorials to general crypto news.

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