Why is the law of diminishing marginal utility important for cryptocurrency investors?

1 answers

• Mar 19, 2022 · 3 years ago
  At BYDFi, we believe that understanding the law of diminishing marginal utility is crucial for cryptocurrency investors. This concept reminds investors to avoid overinvesting in a single cryptocurrency and to diversify their portfolio. As an investor acquires more units of a cryptocurrency, the incremental utility they derive from each additional unit decreases. This means that the potential returns from investing more in a specific cryptocurrency may diminish over time. By diversifying their investments across different cryptocurrencies, investors can potentially mitigate the risk associated with diminishing marginal utility and increase their chances of achieving better returns.
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