Charles Schwab: Allocating only 1%–3% of your portfolio to BTC or ETH can significantly impact overall risk characteristics.

SmartContractAuditor · 2026-04-07T15:16:17+00:00

Charles Schwab Research shows that even allocating 1%–3% of a portfolio to Bitcoin or Ethereum can significantly impact the risk profile of the investment mix. The study recommends two allocation methods: traditional portfolio theory and risk budgeting, and also warns that the high volatility of crypto assets may not be suitable for all investors, who should carefully assess their risk tolerance.

SmartContractAuditor

2026-04-07 15:16:17

Abstract generation in progress

Odaily Planet Daily News: Charles Schwab’s latest research shows that even allocating only 1%–3% of Bitcoin (BTC) or Ethereum (ETH) within an investment portfolio can significantly affect overall risk characteristics. The study notes that Bitcoin and Ethereum have historically experienced drawdowns of more than 70%, far exceeding the volatility levels of stocks or bonds, so even small allocations can have a noticeable impact during periods of market volatility. Charles Schwab proposes two cryptocurrency allocation methods:

Traditional portfolio theory approach: Allocate based on expected returns, volatility, and correlation, but differences in return assumptions are large; if the expected return is below 10%, even aggressive investors find it difficult to support a large allocation.
Risk-based approach: Determine the proportion of cryptocurrency based on the level of risk you are willing to take, shifting the focus from returns to risk tolerance. However, cryptocurrency volatility may still exceed expectations.

Charles Schwab emphasizes that cryptocurrencies are high-volatility assets and are not suitable for all investors. Investors should allocate cautiously in light of their risk tolerance, investment horizon, and how familiar they are with the assets, while also taking into account risks such as liquidity, theft, and fraud. (CoinDesk)

BTC-0,57%

ETH-1,54%

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

1 Likes