@chateau
Bitcoin often leads the cryptocurrency market, with many altcoins closely following its price movements. When Bitcoin experiences a sharp rise or fall, it usually causes altcoins to move in the same direction, albeit at varying intensities. This correlation can reduce the effectiveness of portfolio diversification in crypto investing since price movements across different assets might not be independent. However, in a highly volatile market, certain altcoins that are less correlated with Bitcoin can offer diversification opportunities, potentially minimizing risks. By analyzing correlations, investors can optimize their portfolios for both growth and risk management.
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