You folks shouldn't make it look like investing in bitcoin and investing in crypto isn't diversification because both assets can be converted into cash, but it is just advisable that we diversify into another asset class, such as real estate or selling of commodities, so that we can reduce volatility in our investments, and at some point we can depend on the money we will generate from real estate or selling of commodities to solve our expenses, and it will allow us to hold our bitcoin investment for a very long time because we will not be in a hurry to sell our bitcoin investments since we have multiple streams of income.
My friend investing in crypto and investing in bitcoin isn’t diversification. The fact that you think they’re different is wrong, bitcoin is a type of crypto and when you say crypto I guess you’re saying altcoins and shitcoins. They’re all in the same class just that bitcoin is more stable and is a store of value, it’s the first, and biggest of all cryptos.
So investing in bitcoin and investing in Ethereum or Solana is seen as one kind of investment which is crypto.
Diversification comes in when you invest in a different asset class or industries. A totally different kind of investment from the previous one is what is considered a diversification cause the major aim is to reduce risk and increase your potential returns.
Very true, the controversy surrounding this issue of diversification have long been discussed in this thread and many other bitcoin threads and some folks seem not to understand what this diversification is all about especially when you consider diversification in the crypto space. The reason for diversification is to be able to manage risk especially when you’re already into a certain kind of investment let’s say bitcoin investment and generally we can all agree that bitcoin generally belongs to the cryptocurrency space. As a bitcoin investor, it’s never advisable to diversify into another cryptocurrency space let’s say ethereum, Solana and what have you because they are generally regarded as cryptocurrencies. Diversification have to be in a different space of investment so that you can be able to mitigate risk and reduce some loss incase there’s a loss in one space, the other space should be able to cover up for the losses. And In this case, moving from bitcoin to another shitcoins won’t help you to reduce loss or mitigate your risk, rather you’re increasing your chances of incurring more losses and risking your investments.
Note that diversification does not guarantee profit making, neither does it protect you from every losses, but a well strategized and planned diversification can help to reduce volatility in market/investments and is capable of producing a more stable return over time.