Bitcoin’s had its fair share of drama, and no one’s promising that it’ll be smooth sailing ahead. But for thoughtful investors, there’s reason to believe bitcoin can play more than a speculative role. It has qualities that set it apart from stocks and bonds – and those differences can matter when building a portfolio for the long haul.
Bitcoin’s role in a modern portfolio
The OG crypto’s joining in the conversation, alongside stocks, bonds, and gold – not because it replaces them, but because it behaves differently. For retail investors who are looking to build resilient, well-rounded portfolios, bitcoin is increasingly being seen as a strategic play, not some high-risk moonshot.
Think small, but intentional. Research teams and financial advisors now often suggest that investors allocate up to 5% of their investing money to bitcoin – big enough to make a difference if the crypto rises, but small enough to avoid derailing their portfolio in a plunge.
Bitcoin doesn’t have to outperform everything else. Its value is in the fact that it moves differently – a trait that can complement traditional assets like stocks and bonds, especially in portfolios that already lean heavily on a certain market or region.
Access has also improved. Regulated exchange-traded products (ETP/ETF/ETNs) now let investors gain exposure without managing digital wallets or navigating crypto exchanges.
For most investors, the goal shouldn’t be to time bitcoin’s peaks or chase the next wave of hype. It’s to use a small, deliberate allocations to add diversity, capture some upside, and hedge against risks that traditional assets might miss.
A diversifier with unusual correlations
Despite what you might think, bitcoin’s most useful feature might be its unpredictability. It doesn’t reliably track stocks, bonds, or even gold – and that’s the point.
Because bitcoin’s price drivers are so distinct (inflation, unsustainable government debt, retail and institutional demand, mining economics, regulation), its movements often diverge from those of mainstream markets. That can help diversify a portfolio’s return sources, especially over longer periods.
Studies have shown that adding bitcoin to a portfolio – even in small amounts – can improve its risk-adjusted returns. For example, 21shares⁴ – a long-standing crypto asset manager known for its ETFs – found that adding up to 5% in Bitcoin increased portfolio returns by over 30%, while experiencing the same loss during the largest portfolio drawdown over the past three years.
What most people don’t realize is how much bitcoin’s volatility has cooled as adoption’s grown. Back in 2013, its annualized volatility hit 181%, but by 2025 it had dropped to around 23% – not far off the stock market – thanks to deeper liquidity and more institutional investors in the mix.
Ways to own it
There are multiple ways to add bitcoin exposure to your investing mix – and each comes with trade-offs.
ETP/ETF/ETNs are the simplest for most investors. They offer transparency, liquidity, and compliance, all within a regulated product that you buy through your existing broker or investment platform. There is no need to manage digital wallets or worry about private keys. In some countries, they can even be held in tax-advantaged accounts.
Decentralized exchanges enable self-custody and give investors maximum control – via cold wallets or secure apps – but it also gives them full responsibility. That appeals most to folks who want to exist solely in a parallel and decentralized financial system.
Crypto exchanges are still the starting point for many, but that route carries counterparty and security risks. After the industry’s past failures, most experts recommend ETPs or self-custody over exchange wallets.
Ultimately, the best method depends on how involved you want to be – and how much control you’re prepared to take on.
About 21shares
21shares is a long-established crypto investment firm making digital assets more accessible to investors around the world. As the world’s largest issuer of 100% physically backed crypto exchange-traded products (ETPs/ETFs/ETNs), 21shares offers a regulated way to gain exposure to crypto. Its products are listed across major global exchanges, giving retail and institutional investors alike the tools to integrate crypto into traditional portfolios – without needing to manage wallets or private keys.
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Footnotes:
⁴ Source: 21Shares, Bloomberg, Yahoo Finance. September 2022 – September 2025. Assets used for the portfolio: global equities – iShares MSCI ACWI ETF (ACWI), global fixed income – Vanguard Total World Bond ETF (BNDW), Bitcoin – 21Shares Bitcoin Core ETP (CBTC), Ethereum – 21Shares Ethereum Core Staking ETP (ETHC). Assumptions: annual rebalancing; brokerage commissions, taxes, slippage and additional fees excluded (returns for all three portfolios would be lower if included). Past performance is not a reliable indicator of future results.
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