The futility of crypto diversification

[virtusa]

I'm in about 30 coins.

Total crypto investment is small so easy to add small amounts.

???
30 BTC is about $1.2 million. For me that's not small.

 

[tsznecki]

Wow March 2020. That's called a crisis the world never witnessed before...

I'm still holding up well, as you can see I still have portfolios I trade with. I don't use all my capital and risk shorting on margin in 2 or 3 stocks.

Except 100+ years ago with the Spanish flu.

https://en.wikipedia.org/wiki/Spanish_flu

Don't make excuses.

 

[BKR88]

???
30 BTC is about $1.2 million. For me that's not small.

"30 coins" = 30 different coins (ADA, XLM, ETH, etc....)

 

[Scataphagos]

I'm in about 30 coins.
I don't know which coins, if any, will be good investments so rather than spend endless hours trying to figure out which one(s) will win, I just put small amounts into many.
They may all fail but if a very small number do well, I hope to have a position in one or a few.
Total crypto investment is small so easy to add small amounts.

***I think BTC has a decent chance of dropping to 20,000 which is where I'll be more interested in adding. Just small adds occasionally now.

Nocoiner here, but it makes sense to me to be watching the "crypto fees" sites to see where the action is. Like https://cryptofees.info/

Then again, if you're hoping to catch the next lotto ticket crypto like Shiba, you'll have to scour elsewhere.

 

[S2007S]

Say whattttt


Everything down 50%%%%

 

[Pekelo]

I'm in about 30 coins.

And today you are going to learn the lesson in real time what this thread taught you.

Would you mind disclosing how the whole portfolio is doing, now that the crypto market crashed? If I am right, you are down badly, if your diversification is right, well, but I don't think that would happen.

 

[noddyboy]

Say whattttt


Everything down 50%%%%

Do you have a position or just finding joy in other's misery?

 

[hilmy83]

I know at least 2 members here who smartly diversified into multiple crypto assets. But does that really work?

Generally speaking whatever way Bitcoin goes, so go the rest fo them. This morning a quick look at the crypto market on investing.com is showing everything in the red, except Tether very slightly in the green. The red spread of the top 10 coins are between -8% and -26%. I guess being down -8% is still better than being down 3 times more, so in this case, diversification does work. Although that shit was a never heard of coin (ICP), so maybe we can put it aside.

To me the crypto diversification is like having 10 internet stocks in 1999. Sure it is diversified, IN THE SAME SECTOR!!! If you were diversified in 10 tech stock back then, you still lost pretty much the same amount like having only 1 stock. The whole sector went to hell.

Sure eventually the better coins should win and the worse ones should die, except this hasn't happened yet. Bitcoin is clearly a really bad crypto as a currency, yet it still has the highest evaluation. Doge is well, it is Doge, yet it is the best performing crypto of the year among well established old (older than 5 years) coins. Logic just doesn't work in Cryptoland.

Anyhow let's make a quick comparison of current drop from ATHs, (instead of daily fluctuations):

BTC -39%
ETH -30%
Cardano -29%
Doge -42%
etc.etc.

The point is, their drop from their ATHs are very similar. Diversification in the same sector just doesn't work. Maybe in the future it will, when logic and better features will mean something. (just kidding, they never will)

how is this different than equity markets. you got the big asset driving the market. You're going to say that someone who owns one stock is no different than someone who diversify across different stock sectors?

And no, not all crypto are in the same sector, i would argue not even in the same class.

cryptocurrency is a bad name cause it confuses people into thinking that it's all the same

bitcoin is a an asset value play
ethereum is a smart contract play
the graph is a query play on blockchain
chainlink is connectivity play on external apps
and so on and so on...

 

[Pekelo]

Do you have a position or just finding joy in other's misery?

I am just having fun staying poor.

 

[Pekelo]

You're going to say that someone who owns one stock is no different than someone who diversify across different stock sectors?

not all crypto are in the same sector, i would argue not even in the same class.

I agree with you that not all cryptos are the same, there are certain subsectors. Tether and stable coins are obviously a completely different bird than BTC.

That being said, would you mind posting the different subsectors' performance today? Just pick one crypto from each, I am too lazy to do it.

A qucik look at Coinbase is showing that ETH is actually down more than BTC. How about Cardano? The same shit. So much for subsectoring cryptos...

In theory you are right, the problems with theories is that they don't always work in practice.