Thank you for this Helpful advice.
Some Youtuber or crypto Analyst says. put your money in different coins, memes, Exchange coins, Metaverse and gaming coins, DeFI coins etc
What is the Psychology behind that advices.
I don't know about the psychology, but as I said before, diversifying is about reducing risk, but reducing the potential return as well.
In classical investment theory, one must diversify to avoid losing everything. If you put your money in shares of a single company, there is a very high risk that you will lose it all, even if the company is a good one. However, if you divide your investments among several stocks, properties, commodities, etc. you reduce the risk a lot.
In the crypto world this seems silly to me, as all alts have been proven time and time again to lose against Bitcoin in the long run. The only more or less solid contender is shitEthereum. There are many fancy alts that promise they are going to be the next Bitcoin but just as quickly go up as they go down.
I would recommend you diversify but into other assets. If buying crypto buy Bitcoin, and if anything a bit of Eth or some other you trust (lol) and if you want to diversify more, buy stocks, mutual funds, RE or commodities.
Precisely.
Diversifying your portfolio means reducing risk because your plan is for long term, not short term trading, so basically you ignore all the opportunity you might miss because let's say you put low leverage. Your return might be low but at least you're safe from big liquidation, your funds are safe, and you're making it to survive for long term.
Diversifying also means that your plan is solid, not based on news but based on the data and information you've got on your research.