📊 [Analysis] You Don’t Need a Diversified Crypto Portfolio: Here’s Why - Kenny Li

BlockworksSep 26, 2018 ⋅ 1 min read

Bitcoin dominance is a popular data point created by ShapeShift CEO Erik Vorhees for measuring the market cap growth of bitcoin and altcoins relative to each other. While dominance and market cap are fair ideas, some dangerous misconceptions about cryptocurrency market behavior can come from relying on them too heavily. For example, the prices of most major cryptocurrencies demonstrate very strong correlation with bitcoin’s price and have so for years. Whether bitcoin’s price pumps or dumps, altcoins usually follow suit and to a much more severe degree. And diversifying a cryptocurrency investment portfolio to spread risk in a market filled with bitcoin-pegged cryptocurrencies is likely a futile endeavor. If anything, dominance undersells the material influence that bitcoin has over the cryptocurrency market.

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