False diversification occurs when a portfolio contains many different assets that move together during stress periods; a portfolio of 20 cryptocurrencies is not diversified because all crypto assets fall simultaneously in a crisis, making the number of holdings irrelevant to actual diversification.
definitionpending
Speaker
Diego PereaEvidence Quote
“portfolio of 20 cryptocurrencies is not necessarily Diversified okay because in the time of a crisis every single one of them might fall at the same time”
Source
Matter Of Time Bubble Implodes; What The Next Financial Crisis Looks Like | Diego Parrilla— David LinCreated: 8/12/2026, 6:46:15 PM
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