Charles Schwab: Allocating only 1%–3% of your investment 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 if a portfolio holds only 1%–3% allocated to Bitcoin (BTC) or Ethereum (ETH), it will significantly affect overall risk characteristics. The study notes that both Bitcoin and Ethereum have historically seen declines of more than 70%, far higher than the volatility levels of stocks or bonds, so even a small allocation can have a noticeable impact during periods of market volatility. Charles Schwab proposes two methods for allocating crypto assets: 1) Traditional portfolio theory approach: allocate based on expected returns, volatility, and correlation, but because the return assumptions differ greatly, if the expected return is below 10%, even aggressive investors will find it difficult to support a large allocation. 2) Risk-based approach: determine the proportion of crypto assets based on the risk one is willing to take, shifting the focus from returns to risk-bearing capacity, but crypto asset volatility may still exceed expectations. Charles Schwab emphasizes that crypto assets are high-volatility assets and are not suitable for all investors; investors should allocate cautiously based on their risk tolerance, investment horizon, and how familiar they are with the assets, and also be mindful of risks such as liquidity, theft, and fraud. (Source: ChainCatcher)