The Case Against a Cryptocurrency Allocation

Why is the Maldivian Rufiyaa not going to the moon?

April 2024. Reading Time: 10 Minutes. Author: Nicolas Rabener.


  • Bitcoin and Ethereum were often highly correlated to equities
  • Active management in cryptocurrencies has not been a success
  • The use case for blockchain and cryptocurrencies remains unclear


Another boom in cryptocurrencies could kick off in 2024 as the SEC finally approved multiple Bitcoin ETF applications that have been years in the making. The Grayscale Bitcoin Trust (GBTC) still dominates with $24 billion of assets, but iShares’ Bitcoin Trust (IBIT) quickly accumulated $15 billion.

Fidelity’s Wise Origin Bitcoin Fund ranks third with more than $10 billion of assets under management, but this can be considered disappointing given that Fidelity manages more than $5 trillion, and has an outspoken cryptocurrency enthusiast, namely Abigail Johnson, as a CEO.

Buying coins or tokens via digital wallets has been painful or prohibitive for most investors, so being able to buy at least Bitcoin like any stock on the exchange is a game changer. However, easier access to an investment product does not make it a sound investment proposition per se.

In this article, we will evaluate the case for a cryptocurrency allocation.


Investors’ universe of investable assets steadily expands as asset managers in public and private markets continue to launch new products, which has made investing more complicated. However, we can reduce this complexity drastically by eliminating any products that are highly correlated to equities or fixed income, which are the cornerstones of most investors’ portfolios.

Intuitively, cryptocurrencies should not be correlated to stocks or bonds, but were actually during certain periods. Measuring the 12-month rolling correlation of the two largest cryptocurrencies by market capitalization, namely Bitcoin (BTC) and Ethereum (ETH), to the Nasdaq index shows highly positive correlations in 2020 and 2022.

Although the average correlation of both coins to the Nasdaq was only 0.3 since 2018, the high correlations are concerning as most investors have exposure to technology stocks via the