Schwab says even a 1% crypto allocation can reshape portfolio risk

What Happened

Charles Schwab's research shows that cryptocurrency allocations, even as low as 1-3%, can materially change a portfolio's risk profile due to high volatility. Bitcoin and ether have experienced drawdowns exceeding 70%, far surpassing typical stock or bond declines. Schwab identifies two allocation approaches: traditional portfolio theory, which depends on return assumptions, and risk budgeting, which focuses on desired risk contribution. The firm emphasizes crypto remains speculative and unsuitable for some investors, recommending personal decision-making based on investment horizon and loss tolerance.

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