How much crypto should you own?

Does crypto deserve a place in your portfolio?

Over the past few years, cryptocurrency has evolved from an experimental technology to a maturing asset class. The largest two coins — Bitcoin and Ethereum — alongside a range of alternative projects, are now featured in the portfolios of individual and institutional investors alike.

In 2025, the conversation has shifted from whether to invest in crypto at all, to how much of your portfolio should include it. This remains the key question for anyone branching out from traditional investments, and while the answer will be unique to each investor, there are some helpful parameters to consider.

For perspective, the main reason why crypto has started to garner more attention is its historical outperformance, with Bitcoin outperforming all traditional asset classes over the past 10 years — though as ever, past performance is not a guarantee of future returns.

Despite multiple crashes, including losing more than 70% of its value as recently as 2022, the long-term rewards have been exceptional compared to traditional assets, so far — though as ever, past performance is not an indicator of future returns.

But it’s not just the returns. Crypto offers a new way to diversify your portfolio, because unlike stocks, bonds or real estate, it exhibits relatively low correlation with other asset classes. This means including a small percentage of crypto in your portfolio could improve its overall risk-adjusted returns. However, it’s worth noting this correlation is not fixed and crypto can still be hit during market-wide selloffs.

It's also worth noting that stocks, bonds and real estate — like all traditional assets — come with their own risks, including corporate missteps, monetary policy mismanagement and property pricing corrections, respectively.

Some investors also appreciate crypto for its innovation. Blockchain technology is still in its early stages, with applications ranging from decentralised finance to supply chains and digital ID. As the ecosystem matures, crypto could play a key role in the next evolution of digital infrastructure, and owning a slice of this market can feel to some like getting in on the ground floor of the next great tech advancement.

On the other hand, volatility and regulatory uncertainty in crypto is severe. Prices of individual assets can swing wildly in limited time frames, and legal frameworks are still being developed around the world.

Overall, while the new asset class has strong potential, the key thing is to approach crypto investing with a clear risk attitude, and a defined trading strategy, to minimise the risk of losses.

How to invest in cryptocurrency with us

1. Open an account online or download our IG Invest app. From there, you’ll be able to access the cryptocurrency market through our platform.
2. Learn more about how the cryptocurrency market works and choose a coin to research.
3. Build a trading plan that aligns with your personality and risk appetite.
4. Search for your desired coin on our web platform or app.
5. Choose your position size, then open and monitor your investment.

Remember that past performance is not an indicator of future returns, that the value of investments can fall as well as rise and that you could get back less than your original investment.

If you want to test out your strategy first without risking real capital, consider our demo account where you can practice your cryptocurrency trading tactics with virtual funds.

Determining your crypto allocation

If you do decide to include crypto in your portfolio, the natural next question becomes one of what percentage the asset class should occupy within your portfolio. As ever, there is no one-size-fits-all approach, but the following considerations can help you to make your own investing decisions:

• Risk tolerance — crypto is one of the most volatile asset classes in the world, with double-digit drops in value over a few days not uncommon. If you struggle emotionally during downturns, a more conservative allocation might be appropriate. Conversely, if you can emotionally and financially withstand major swings, you might consider a larger allocation
• Investment horizon — your time frame matters. If you're investing for short-term goals, crypto might be too risky. But if your goals are longer-term, and particularly if you are far from retirement, you may be better able to afford to hold through volatility
• Financial goals — think about what you're trying to achieve. Crypto is arguably not a place for capital preservation, but if you're looking for aggressive growth and are willing to accept crypto’s implied instability, a bigger allocation might be justified
• Portfolio size — the larger your portfolio, the more flexibility you have to allocate to higher-risk assets without destabilising your overall financial position.
• Liquidity needs — if you need easy access to your funds, it’s worth noting that crypto markets can be illiquid or even temporarily frozen, and that prices can crash, during periods of market stress or regulatory changes

As a general rule, conservative investors near retirement, or who might be simply risk-averse, may want to consider an allocation of just one or two per cent of their total portfolio. This is small enough that even a total loss wouldn’t have much impact but still allows for a stake in the upside.

Moderate investors with a higher risk tolerance and perhaps a longer time horizon might consider somewhere in the region of three to five per cent to be the sweet spot — allowing for decent possible returns without overexposure to crypto’s volatility.

More aggressive investors with strong conviction in crypto as an asset class might allocate even more capital, to a maximum of perhaps 10%, but these investors tend to be very thoroughly researched and sport large risk appetites.

It’s worth noting that regardless of your percentage allocation, it’s important to consider regularly rebalancing to prevent crypto from taking up too much of your portfolio during bull runs. For perspective, many institutional investors are starting to allocate small amounts of crypto to their own portfolios, but very few retain crypto as their largest asset.

Risk management

Once you’ve settled on a portfolio allocation, you then need to consider which coin to invest in. Cryptocurrency (just like stocks) is a broad asset class covering many different projects.

Key considerations include:

Bitcoin and Ethereum — the two most established and widely held cryptocurrencies. Bitcoin is often viewed as ‘digital gold,’ while Ethereum is the base for many decentralised applications. Together, they perhaps represent a good starting point for newer investors starting out in the space.

Altcoins — thousands of other tokens offer exposure to specific technologies or platforms, including Solana, Cardano and Polkadot. While they may offer higher growth potential, they also come with increased risk, and therefore it may make sense to limit altcoins to a small portion of your total crypto allocation.

Stablecoins — pegged to traditional currencies and primarily used for liquidity, yield farming or hedging. While they don’t offer much growth, they can be useful for managing risk within your crypto portfolio.

Many risk management strategies are the same for crypto as they are for stocks. In general, it’s not a good idea to put all your crypto capital into a single coin. Meanwhile, pound-cost averaging into the market by spreading your purchases over time to reduce the impact of short-term volatility is possibly even more useful for crypto than for stocks.

Perhaps more uniquely, it’s key to stay up to date with regulatory updates as your jurisdiction’s attitude and laws regarding crypto are likely to change as the asset class makes further institutional inroads.

In terms of asset-specific risk management, it’s worth noting that all cryptocurrencies come with their own unique risk profiles.

For example, stablecoins are subject to collateral mismanagement, depegging and centralistion risk, while utility tokens risks include smart contract vulnerabilities, potential liquidity issues and governance manipulation.

Regardless of the coin, it’s important to research the specifics.

Portfolio rebalancing

Just like a stock portfolio, crypto investments should be actively managed and regularly reviewed. Wider market conditions, alongside your personal financial situation, and risk appetite, can all change over time.

One very common mistake is letting your crypto position grow unchecked during bull markets. If you started with a 3% allocation and it rises to 10%, your overall portfolio risk has increased. Rebalancing by selling some crypto and reallocating to other asset classes can help keep your portfolio aligned with your goals.

Beyond this, you might also want to reassess your portfolio after major life milestones — like a new job, getting married or retiring — or when there has been a regulatory change. And as you become more knowledgeable in the space, your investing philosophy may also change.

But most importantly, the crypto market is still to a significant degree driven by emotion. Fear of missing out and panic selling can lead to poor decisions, so any crypto investor should be prepared for volatility, have a plan and stick to it. This might include avoiding hype, or even making allocation decisions based on short-term market movements, in addition to using tools like stop-losses.

Crypto is an exceptionally volatile double-edged sword: the same volatility that generates faster profits is also responsible for quicker potential losses.

How much crypto to own summed up

• Crypto is becoming a mainstream asset with potential for diversification and high returns, but it comes with extreme volatility and regulatory uncertainty
• You might start by assessing your risk tolerance, investment horizon, financial goals, portfolio size, and liquidity needs. Conservative investors might allocate one to two per cent of their total portfolio
• Consider diversifying across coins, using pound-cost averaging, and staying informed about legal developments to reduce risk exposure.
• Regularly review your portfolio to prevent crypto from overtaking your allocation during bull markets. Stick to your strategy and avoid emotional decisions