Charles Schwab: Allocating only 1%–3% of BTC or ETH in the investment portfolio can significantly impact the overall risk profile

By: rootdata|2026/04/07 23:42:04

Charles Schwab's latest research shows that even a 1% to 3% allocation of btc-42">Bitcoin (BTC) or Ethereum (ETH) in a portfolio can significantly impact overall risk characteristics.

The study points out that both Bitcoin and Ethereum have historically experienced declines of over 70%, far exceeding the volatility levels of stocks or bonds, thus even small allocations can have a noticeable effect during market fluctuations. Charles Schwab proposes two methods for allocating crypto assets: 1. Traditional Portfolio Theory Method: Allocating based on expected returns, volatility, and correlation, but the assumptions about returns vary greatly; if the expected return is below 10%, even aggressive investors may find it difficult to support large allocations. 2. Risk Budgeting Method: Determining the proportion of crypto assets based on the risk one is willing to take, shifting the focus from returns to risk tolerance, but the volatility of crypto assets may still exceed expectations. Charles Schwab emphasizes that crypto assets are high-volatility assets and are not suitable for all investors. Investors should cautiously allocate based on their risk tolerance, investment horizon, and familiarity with the assets, while also being aware of risks such as liquidity, theft, and fraud.

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