Learn how allocation reduces blowups and improves survival.
Definition
Diversification spreads risk so one failure does not ruin you. It is not owning many random coins.
Simple beginner allocation thinking
Many beginners do better with a core in high liquidity assets and a smaller satellite bucket for higher risk ideas. The exact split depends on risk tolerance and time horizon.
What diversification cannot fix
In broad market crashes, many assets fall together. Diversification reduces project-specific risk, but not systemic market risk.
Practical tip
Diversify across risk levels, not across logos. Quality beats quantity.
Warning
If you cannot explain why you own it, you should not own it.
Quick quiz
- What is diversification?
- What does it not fix?
- What is a common beginner mistake?