Charles Schwab warns: Allocating just 1%–3% of your funds to BTC/ETH can significantly impact your portfolio's risk profile.

CycleProphet · 2026-04-07T15:11:25+00:00

Charles Schwab Research reports state that even if only 1%–3% of funds are allocated in an investment portfolio to Bitcoin or Ethereum, it can significantly affect the overall risk profile because its volatility is higher than that of traditional assets. The report proposes two allocation methods: the traditional portfolio theory approach and Risk pre algorithm.

CycleProphet

2026-04-07 15:11:25

Abstract generation in progress

Deep Tide TechFlow message. April 07, according to CoinDesk, financial giant Charles Schwab released a research report warning that even if a portfolio allocates only 1%–3% of its funds to Bitcoin or Ethereum, it could still significantly change the portfolio’s overall risk profile, because both Bitcoin and Ethereum have historically seen drawdowns of more than 70%, far exceeding the volatility levels of stocks or bonds; therefore, even small allocations can have a noticeable impact during periods of market volatility.

Charles Schwab proposed two crypto asset allocation approaches: first, the traditional portfolio theory method, which allocates based on expected returns, volatility, and correlation; second, the risk-based approach, in which the proportion of crypto assets is determined by the amount of risk one is willing to take on, shifting the focus from returns to risk tolerance.

BTC-1.85%

ETH-2.42%

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