Altcoin Diversification: Does Holding 15 Coins Protect You?

If you hold a lot of different altcoins, there's a good chance you did it to stay safe and diversify. You spread your money out. So, if one coin goes wrong, the others carry your portfolio and you don't get absolutely destroyed. So, we checked whether it works. We picked 15 big altcoins.

Ethereum's in there. So is XRP, Polka Dot, even Avalanche. Then, we spread money evenly across all of them for the last 12 months and put it next to just holding [music] Bitcoin. spread out like that, you'd be down about 44% right now. Just holding Bitcoin, you'd be down about 26%. Now, look at the biggest drops of the year, and those are the days you were counting on the other coins to carry you. [music] And every time, almost all of them fell together.

So, does spreading your money across lots of altcoins actually protect you? We went through the worst days of the last year, coin bycoin, to see what really happens to your money when the market drops. and we'll show you how to check your own coins with [music] three quick questions. Let's run it. All right, bull runners. Welcome back to the channel.

Now, the best place to start is the day crypto saw more force selling than ever before. That was October 10th of last year. The US China trade war heated up that day and crypto fell hard. In about 24 hours, the exchanges wiped out the bets of more than$1.6 million traders. That's about $19 billion worth of bets closed in a single day.

Now, check this out. This is what happened to the coins we checked that day. Every single one of them fell. Bitcoin dropped about 7%. Polka Dot and Avalanche dropped about 27%.

Almost four times as much. And 14 of the 15 fell harder than Bitcoin did. So, if you'd spread your money across coins like these, whichever ones you picked, they all went the same way that same day. You might think that was just one bad day. But when we looked at the whole year, the same thing kept happening.

To show you, we gave each coin a score for how closely it follows Bitcoin. It goes from 0ero to one. A one means every time Bitcoin moves, the coin moves right along with it. It's correlated. A zero means the two have nothing to do with each other.

They're not correlated. Over the last 12 months, the typical coin we checked scored about 0.73. So most of the time when Bitcoin moved, it moved two in the same direction. Ethereum scored 0.93. So think about that.

Ethereum has its own network, its own apps, its own users, its own use case compared to Bitcoin, and it still moved almost exactly like Bitcoin. And it got worse on the bad days. Remember those big drops I mentioned at the start? We took Bitcoin's 10 worst stretches of the year, a few bad days each. And every one of them, almost all the coins we checked fell, too.

Bitcoin dropped about 7 12% on average, and the altcoins dropped about 9%. So on the days you'd most want the other coins to carry you, they fell even harder than Bitcoin. And it happened again this year. On February 5th, XRP dropped nearly 19% in a day, down to about a$124. And Chain Link wiped out every gain it had made since October of 2023.

Now look at the whole board that day. Bitcoin fell about 14% and Ethereum, Salana, Dogecoin, Avalanche, Chain Link, and Cardano all fell about 14 or 15%, too. Those are six coins built for completely different things. If you'd spread your money across all six, it would have looked like you only held one. Now, some people do expect this to change.

One of them is Michael Nadio. He runs the DeFi Report, a crypto research newsletter, and he thinks these coins should start going their own way, but listen to what he says still comes first.

I think, you know, over time, we should start to see these assets start to trade independently of each other. But I'd say right now, uh, everything is still sort of being priced relative to what Bitcoin is doing. And so um if you have a view on ETH, if you have a view on, you know, other altcoins in the market, in my view, you first have to have a thesis and a view for what Bitcoin is going to be doing.

And that goes for whatever altcoins you hold. Where Bitcoin goes next still decides a lot of what happens to them. So why do coins with completely different jobs, narratives, use cases all fall at the same time? Great question. Well, a lot of it comes down to how people trade crypto.

You see, in March of this year, about threearters of all trading on the big exchanges was in derivatives. In plain terms, those are bets on where the price goes next. And a lot of those bets are made with borrowed money. Here's how that drags everything down together. Say a trader puts up some Salana and some Dogecoin to borrow money for a bigger bet.

If the market drops far enough, the exchange sells for them automatically to cover the loan, and it can sell anything they put up, even a coin that was doing fine. So, a drop in one coin turns into selling of other coins that had nothing to do with it. And that selling pushes prices lower, which forces more traders out, and it creates a domino effect that keeps spreading. And that's exactly what happened on October 10th. The clearest breakdown of that day came from a big crypto investment firm called Coinshares.

It found that the firms that normally keep buy and sell orders on the exchanges pulled back, so there was almost nobody left to buy. Cosmos briefly fell from about $4 to a tenth of a cent on Binance. And in less than a day, about $50 billion dollar of open bets were gone. So, when every coin you own goes red at once, it's usually because the exchanges are forcing the same traders to sell everything at the same time. And there's another reason Bitcoin held up better.

It has a lot more money sitting behind it. At the time I'm recording this video, the US Bitcoin ETFs, which are the funds you can buy through a normal brokerage account, hold about $ 108 billion. The Ethereum ones hold about 14.6 billion. Most altcoins have nothing close to that. So when the market drops, there's a much deeper pool of money around Bitcoin, and the altcoins are left with whoever is still trading them.

And for altcoins, that crowd got a lot thinner after October 10th. You can see it in the numbers from a crypto data firm called Kao. Trading in coins like Ethereum, XRP, Salana, and Dogecoin fell about 60% after the crash. And on the big ones, the orders waiting close to the price shrank from about $2.6 million to about 1.7 million. Fewer orders waiting means it takes less selling to push the price down.

So, the next big drop can go further and much faster. So, if they all fall together, does owning more of them help at all? Well, over the last year, it left you worse off than just holding Bitcoin. Here's how the whole year looked side by side. Now, 14 of the 15 coins ended the year down, and the typical one lost about 45%.

With your money spread evenly across all of them, you'd have lost about 44%. Bitcoin lost about 26%. So, think about what that means for your money. A $1,000 spread that way would be worth about $560 today. The same $1,000 in just Bitcoin would be worth about $740.

And at the worst point of the year in the bare market, that spread out money was down about 59%. Bitcoin's worst was about 48%. On top of that, about 3/4 of the ups and downs in those coins lined up with bitcoins. So holding all those coins was really still a bet on where Bitcoin goes. When Bitcoin fell, they fell the same way, only further.

And it's not just our numbers. Researchers at IE University in Spain looked at 13 of the biggest coins from 2020 to June of 2026. Over the course of six years, they found the protection you get from spreading out inside crypto very nearly disappears on the most extreme days. And the usual risk models put the chance of everything crashing at once about eight times too low. The paper hasn't been peer- reviewed yet, but it lines up with what we found.

And the name of the paper explains it. crashing together, rallying apart. In calm weeks and in rallies, coins do drift apart a bit. One pumps, another doesn't. It's like what happened with Zcash recently near Protocol, but yet XRP was trading sideways or even down. That's why holding lots of them feels safe.

But when the market crashes, they all snap back together. So spreading out helps on the good days and it stops helping on the days that you'd actually need it when the market crashes. And to be fair, there are signs this is slowly changing. Another study of Bitcoin in 18 altcoins found that coins have been moving a bit more on their own since the Bitcoin ETFs launched in 2024, but on the worst days, they still fell as one. And that's what makes this so hard to swallow.

You didn't put all of your eggs in one basket, and that was the sensible thing to do. It's just that in crypto, most coins still go up and down with Bitcoin. So spreading your money across them spreads the risk a lot less than it feels like it should. But one coin we checked went its own way. So, we'll use it as an example because it shows what a coin needs to hold up when everything else falls.

And it's Tron. It finished the year up about 5% while Bitcoin lost about 26%. Its score with Bitcoin was about 0.35, the lowest of the whole group by far. Remember, Ethereum's was 0.93 and on October 10th, while Polka Dot lost about 27%, Tron lost only 5%. So, what was different about Tron that we need to understand?

Well, it comes down to what people actually use it for. Tron is mainly used for moving digital dollars, the coins people call stable coins. About half of all Tether, the biggest of those digital dollars sits on Tron. And in the third quarter, about 73% of all stable coin volume ran through it. Now, that's from a Coindesk report that Tron paid for.

So, a lot of people using Tron are just sending dollars and they keep doing that whether the market is up or down. Now, that means the coin that held up had a reason to be used that had nothing to do with the market's mood. And Tron can still drop with everything else. It fell on October 10th, too. But over the last 12 months, it had something holding it up.

And Tron is just an example here. What matters is what it shows you to look for in your own coins in your portfolio. So, here's where that leaves you. Over the last year, holding lots of altcoins didn't spread your risk that much because they mostly went up and down together. And when the market dropped, you lost more than if you just held Bitcoin or stable coins.

But you can check how spread out your coins really are with these three questions. First, how much of it moves together? Look at your coins on the next bad day. If they all go red at once, count them as just one position, not diversification. Second, how big is that one position?

Add up everything that falls when the market falls and look at that total as a single bet. And third, does anything you hold get used for a reason that doesn't depend on the market's mood, like the people sending dollars on Tron. If nothing does, the number of coins you own isn't doing much to protect you. Now, those questions sound simple, but answering them about your coins is harder than it looks because your emotions might be attached to them. You see, you picked each coin for its own reason.

So, on your phone, they look like separate bets. They look like you're diversifying. And the only time you really see how tied together they are is in the middle of a crash when every one of them goes red at once. Now, you don't have to wait for the next crash to find out. What I've done is I filmed a free training for you through the link in the description below.

Click that right now. Watch that video. If it makes sense, book a strategy call with an expert on my team. On that call, my team looks at the coins that you actually hold and runs them through those same three questions with you. They check how much of it moves together, how big that one position really is, and what a crash would cost you.

So, by the next time a big drop comes in the market or a black swan event, you already know what spreading out should look like for you, not just in different altcoins, but in different strategies. That includes your long-term holdings, your stable coin yield, your DeFi yield, your day trading, your swing trading strategies, and how much you have in cash versus crypto. So that way you can be fully ready for whatever the market throws your way. So if that sounds good to you, it's the first link in the description, the one that says get your free crypto portfolio review. If you're watching this on mobile, tap more.

It's the link right at the top. There's a short video, a quick form, then you pick a time to speak with an expert on my team. So as always, I will see you on the next video. I will see you at the top. You know what to do.

Stay bullish. Hey, hey, hey, hey. [music]