Let's immediately define that we are considering exclusively the cryptocurrency market, not the stock market, not the raw materials market or any other.
As you know, the crypto market is subject to high volatility and price manipulation - this is its undoubted advantage and earning opportunities for us, but also increased risks (if they are not taken into account).
Why doesn't portfolio diversification work?
The reason is low liquidity - insufficient supply and demand, which are easily manipulated through the news background and the lack of regulation by regulatory authorities.
Example:
Global cryptocurrency market capitalization - $2.2 trillion
US stock market capitalization - $40 trillion
At the same time, $1.1 trillion dollars belongs to the grandfather of BTC.
In most cases, when, to put it simply, the value of BTC falls by 5-10%, other altcoins can fall by 20-30%, or even more.
But everything is growing unevenly too!
The only way to protect your portfolio from increased volatility and serious drawdowns is NOTHING.
You should always keep spare stablecoins to average out your position during major drawdowns in the coins you have chosen, analyzed and written down in your notebook.
Is it worth buying BTC? We wouldn't. Early holders have already made money on it, which is what the news constantly writes about, like "a wallet from the old days woke up and sold its BTC."
Is it worth buying altcoins? Maybe yes, if the project is new, promising, developing and in line with current narratives.
The best thing to do is to take projects from different segments: Defi, Web3, L1, L2/L3, DePin, Gaming.
Think for yourself, decide for yourself - to have or not to have.
