SummaryShould digital asset portfolios be diversified?Can diversification of cryptocurrency assets mitigate risk in a highly volatile asset class?As with any investment portfolio, timeframe, risk tolerance and risk capacity all play key roles.By Tyrone Ross and Erik SmithOver the past 13 years, the cryptocurrency market has reached a cumulative market capitalization in the trillions. As of September 2022, Lukka Enterprise Data has listed 50 cryptocurrency assets with a market capitalization of over USD 1 billion. With an increasing number of investment options to choose from, many market participants are wondering: Should digital asset portfolios be diversified? Can diversification of cryptocurrency assets mitigate risk in a highly volatile asset class? Generally speaking, financial advisors and investors tend to diversify broadly across asset classes and within asset classes. After all, actively picking investments is incredibly difficult. As Craig Lazzara, Managing Director and Global Head of Index Investment Strategy for S&P Dow Jones Indices, points out, “Returns are typically driven by a relatively small number of strong performers, which pull the index’s return above that of most of its constituents.” There are decades of historical performance data that support this observation in the equity markets. Does the same apply in the digital asset markets?Let’s take a look at four S&P Digital Market Indices: S&P Bi...
Top Altcoins to Buy this Crypto Market Crash
