Charles Schwab: Allocating 1% to 3% of your assets in cryptocurrencies can significantly alter your portfolio risk.

According to a report from CryptoNews, a digital asset research report recently released by Charles Schwab Wealth Management indicates that the allocation logic for cryptocurrencies in an investment portfolio should focus on the investor’s risk tolerance rather than simply predicting returns. The report shows that, because crypto assets have extremely high volatility, even allocating only 1% to 3% in Bitcoin or Ethereum within a portfolio would significantly increase overall volatility and materially change the portfolio’s resilience under extreme market conditions. Historical data show that in past cycles, both Bitcoin and Ethereum have experienced sharp drawdowns of over 70%, with risk levels far exceeding those of traditional stocks and bonds. The institution’s research team points out that if investors set the expected return rate for crypto assets below 10%, their risk-adjusted returns would be insufficient to support meaningful asset allocation. Charles Schwab Wealth Management emphasizes that, at present, there is no absolute “right” unified proportion for allocating to crypto assets in the market. Such assets fundamentally remain speculative, high-risk satellite holdings and are not suitable to serve as the core foundation of an investment portfolio. The institution suggests that when introducing digital assets, investors should use a risk budget model, shifting core evaluation metrics from return speculation to strict control of the overall account’s risk exposure.