Definition ∞ This is an investment strategy that involves spreading assets across various investment types. The objective is to reduce overall portfolio risk by ensuring that poor performance in one asset class does not disproportionately affect the total value. It is a fundamental principle of prudent portfolio management.
Context ∞ In the cryptocurrency sector, investment diversification discussions often focus on allocating capital across different digital assets, blockchain protocols, and related investment vehicles. Analysts are assessing the correlation between various crypto assets and traditional markets to inform allocation strategies. Key considerations include the volatility inherent in digital assets and the potential for uncorrelated returns from novel blockchain-based investments.
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