This means buying altcoins across different narratives and sectors. The goal is to anticipate if one narrative underperforms, others can help balance it out. This is especially important for beginner investors who aren’t yet skilled at narrative switching.

#2 Cap Diversification.

Here, diversification happens within the same narrative but across different market caps. You can allocate between large-cap, mid-cap, and low-cap coins. When a narrative gains strong momentum, some low-caps can also rally significantly.

#3 Liquidity Diversification.

This involves spreading investments between liquid and illiquid assets. Liquidity matters when planning an exit strategy. Liquid coins generally have low spreads and are easy to enter or exit, while illiquid ones can be harder to trade.

#4 Time Diversification.

This relates to entry timing. In the fast-moving crypto market, spreading out your buys is important. Ideally, accumulation should be completed within the first month—waiting too long risks missing the momentum.