Reason Why The Crypto Market Is Down (Part 6)

#6. Risk diversification isn’t yet possible.

When confronted with viable manipulation and market volatility, buyers commonly diversify their assets. Theoretically, this should imply investing in Bitcoin (BTC), Ethereum (ETH) and higher threat ICOs or altcoins.

But in the crypto market, diversification doesn’t work the way investors favor it to. More than 50 percent of the cryptocurrency market cap is Bitcoin alone. This is because most buying and selling happens between BTC and altcoins considering the fact that you can't convert fiat, which means government-backed forex like the USD, immediately into most cryptocurrencies.

So when Bitcoin’s price falters, buyers have a tendency to convert their cryptocurrencies into stablecoins or fiat, triggering a large-scale market decline. In different words, chance diversification doesn’t work in crypto yet.