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

ME News report: On April 7 (UTC+8), Charles Schwab’s latest research shows that even allocating only 1%–3% of a portfolio to Bitcoin (BTC) or Ethereum (ETH) can significantly affect overall risk characteristics. The study notes that both Bitcoin and Ethereum have historically seen drawdowns 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 crypto-asset allocation approaches: 1) the traditional portfolio theory method: allocating based on expected returns, volatility, and correlation, but with large differences in return assumptions—if the assumed expected return is below 10%, even aggressive investors may find it difficult to support a large allocation. 2) the risk-based method: determining the proportion of crypto assets based on the amount of risk the investor is willing to take, shifting the focus from returns to risk-bearing capacity, but crypto assets’ volatility may still exceed expectations. Charles Schwab emphasizes that crypto assets are highly volatile and are not suitable for all investors. Investors need to allocate cautiously based on their risk tolerance, investment time horizon, and familiarity with the assets, while also paying attention to risks such as liquidity, theft, and fraud. (Source: ChainCatcher)