Does crypto make your portfolio less risky? Only if you do it right, experts say — SkimNews
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- Urban Institute survey of 3,194 U.S. adults (fielded January, published this month): 45% of crypto investors cite diversification as their primary reason for holding crypto — the top motivator, ahead of belief in crypto's future (27%), expected higher returns (11%), and distrust of the U.S. dollar (5%).
- Douglas Boneparth, certified financial planner and CNBC Financial Advisor Council member, frames the shift as a sign of "maturation" — "when the primary motivation moves from ideology or speculation toward portfolio construction."
- Wells Fargo Investment Institute's Veronica Willis reports crypto has a 0.2 correlation with the S&P 500 over the past decade (vs. bonds at 0.02), making it "very low" and a "good complement to more traditional investments."
- Morningstar's Amy Arnott wrote in a May 2025 article that bitcoin's correlation to U.S. stocks rose to 0.55 over the trailing three-year period ending April 2025, up from near zero or negative in earlier periods.
- Boneparth cautions that correlations spike during "acute market stress, when investors sell whatever is liquid" — "the diversification benefit is real but not unconditional."
- Willis recommends a 2-3% crypto allocation; Boneparth suggests 1-2% and warns that above 5% "volatility can begin to dominate the portfolio's overall risk profile," at which point crypto "stops functioning as a diversifier."
Why it matters: The 45% diversification finding marks crypto's evolution from countercultural bet to mainstream portfolio tool — but Morningstar's data showing bitcoin's stock correlation climbing from near zero to 0.55 over three years means the very diversification benefit more investors are chasing is simultaneously eroding as crypto joins the traditional market.
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