According to U.Today, diversifying investments with a mix of different types of assets such as cash, cryptocurrencies like Bitcoin, and commodities can help maintain portfolio stability during stock market downturns. Cash and alternatives are typically used to counterbalance the volatility of the stock market. When stock prices fall, cash, particularly in the form of U.S. dollars, often remains stable or increases in value as it tends to move in the opposite direction to stocks.

Recent data from a Fidelity analyst indicates that Bitcoin and other cryptocurrencies are gaining popularity among investors seeking to diversify their risks. Bitcoin's movement differs from stocks, making it an attractive alternative. For instance, due to halving cycles, Bitcoin's value may rise while stocks and the overall economy falter.

Jurrien Timmer suggests that these diverse assets - cash, Bitcoin, and gold - serve as tools that investors can utilize to shield themselves from stock market losses. These assets are all benchmarked against the S&P 500. If the S&P 500 declines but these other assets remain stable, the value of investments may not decrease significantly, which is why investors hedge. A balanced mix of cash, cryptocurrencies, and commodities can help protect your investment portfolio during periods of stock market instability. This strategy aims to strike a balance between preserving capital and providing growth opportunities.