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  1. Home
  2. /Glossary
  3. /Diversification
Back to Glossary
traditional-finance

Diversification

Spreading investments across different assets to reduce risk.

Definition

Spreading investments across different assets to reduce risk. The idea is that when some investments fall, others might rise. In crypto, diversification across different sectors like DeFi, infrastructure, and gaming can help, though everything tends to correlate in major downturns.

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Related Terms

Portfolio

Your collection of investments across different assets.

Asset Allocation

How you divide your investments across different asset classes like stocks, bonds, crypto, and cash.

Risk Management

Strategies for limiting potential losses in your investments.

Accredited Investor

Someone who meets specific income or net worth thresholds set by regulators, qualifying them for investments not available to the general public.

Anti-Money Laundering (AML)

Laws and procedures designed to prevent criminals from disguising illegal funds as legitimate income.

Blue Chip

A well-established, financially sound company or crypto project with a proven track record.

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