The risk of a portfolio can be reduced via diversification. By investing in different assets, spanning different financial instrument, use cases, industries, and categories, a trader can mitigate risk.
Diversification in Crypto Trading?
It involves acquiring a group of crypto assets whose returns are not directly correlated to manage risk.
A trader may diversify his cryptocurrency portfolio by purchasing cryptos that are not affected by the same variables. Cryptocurrencies are generally expanded based on adoption rate and use cases.
In this post, we are not going to look at the entire cryptocurrencies in the ecosystem; we’ll classify them by use cases and further narrow them down by the most active.
Below is a classification of the different cryptocurrencies by use cases