Anyone else regret over-diversifying in crypto?
Anyone else regret over-diversifying in crypto?
I’ve been investing in crypto for about 5 years, and looking back, I think one of my biggest mistakes was confusing diversification with owning a little bit of everything.
Over time I accumulated a large number of coins across different narratives. Layer 1s, DeFi, gaming, AI, metaverse, meme coins, you name it. At the time, it felt like the smart thing to do because I didn’t want to miss the next big winner.
The problem is that many of those positions are now down 80-90% from where I bought them. A few survived, but most never recovered.
When I compare my portfolio to a simpler BTC-heavy or BTC/ETH portfolio, I honestly wonder whether I would have been much better off taking fewer bets and concentrating on higher-conviction assets.
Part of me still thinks diversification reduces risk.
Another part of me thinks that in crypto, over-diversification just means you end up owning a lot of losers.
For those who’ve been through multiple cycles:
Do you own more coins today than you did a few years ago, or have you become more concentrated over time?
Owning many different alt coin crypto currency is not diversification…. I would call it diluting…. Buy gold, stocks,and bonds too. And stocks cover a broad range too, from blue chip to hail mary types.
Three cycles in and my portfolio went from 20+ coins to basically BTC, ETH, and stablecoins. Every cycle I tell myself I’ll be more disciplined and every cycle I end up chasing narratives. The trick was finally admitting that holding 15 altcoins isn’t diversification it’s just gambling with extra steps
I think most people learn this one the hard way. Diversification in crypto can look sensible at first, but if everything is just a higher beta version of the same risk trade, you’re not really diversified. You just own more ways to underperform BTC when liquidity dries up.
I’ve become much more selective over time. Less interested in owning every narrative, more interested in whether the market actually has enough liquidity and structure to support risk outside BTC/ETH.