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

ME News Report, April 7 (UTC+8), Charles Schwab’s latest research shows that even allocating just 1%–3% of a portfolio to Bitcoin (BTC) or Ethereum (ETH) can significantly impact overall risk characteristics. The study points out that both Bitcoin and Ethereum have experienced declines of over 70% in history, far exceeding the volatility levels of stocks or bonds, so small allocations can also have a noticeable effect during market fluctuations. Charles Schwab proposes two methods for crypto asset allocation: 1. Traditional portfolio theory: allocating based on expected returns, volatility, and correlation, but with large differences in return assumptions; if expected returns are below 10%, even aggressive investors may find it hard to justify large allocations. 2. Risk-based approach: determining crypto asset proportion based on risk tolerance, shifting focus from returns to risk capacity, but crypto asset volatility may still exceed expectations. Schwab emphasizes that crypto assets are highly volatile and not suitable for all investors; investors should carefully allocate based on risk tolerance, investment horizon, and familiarity with assets, while also paying attention to risks such as liquidity, theft, and fraud. (Source: ChainCatcher)