Definition ∞ Cross-asset diversification is an investment strategy that involves allocating capital across different types of asset classes. The purpose is to reduce overall portfolio risk and volatility. This method distributes investment exposure across assets that may react differently to market conditions.
Context ∞ This strategy is increasingly relevant in digital asset portfolios, where investors spread holdings across various cryptocurrencies, stablecoins, and tokenized traditional assets. It helps mitigate the inherent volatility of single digital assets. Market analysts frequently discuss diversification as a key risk management technique for participants in the crypto economy.
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