Portfolio Diversification

Diversification means spreading your investments across different cryptocurrencies (and other assets) to reduce risk. Instead of putting all your money into one cryptocurrency, you invest in several. Imagine you’re at a buffet with many different dishes. If you only pick one dish and it turns out to be bad, you might end up hungry. But if you try a bit of everything, you’re more likely to have a satisfying meal. Similarly, diversifying your portfolio helps reduce the risk of losing money if one investment doesn’t perform well.