Crypto Diversification

Definition ∞ Crypto diversification is the strategy of distributing investments across various digital assets to reduce overall portfolio risk. This approach involves holding a range of cryptocurrencies with differing characteristics, market capitalizations, and use cases, rather than concentrating holdings in a single asset. The goal is to mitigate the impact of adverse price movements in any one particular cryptocurrency. Effective diversification considers correlations between assets and market sector exposure.
Context ∞ The key discussion around crypto diversification often relates to managing volatility and optimizing risk-adjusted returns within the digital asset market. A critical future development involves the maturation of institutional investment products that facilitate broader portfolio allocations. This provides immediate context for news concerning investment strategies and market stability analyses.