Global Market Portfolio

Crypto enters the portfolio chat

Once dismissed as a speculative niche, crypto has moved into the investment mainstream. Driven by ETF adoption, institutional participation and growing market depth, digital assets now warrant a strategic place in diversified portfolios.

20 July 2026 5 min read

Frederic Dodard, CFA, FRM

Head of Portfolio Management, ISG, EMEA

Amy Le, CFA

Investment Strategist

Crypto has moved from a niche, volatile market to a visible part of the global investable universe. Rapid growth, ETF access, institutional demand and clearer regulation now make it a potential contender to find its place in the Global Market Portfolio at least on the sole criterion of market capitalization.

If we consider doing this hypothetically to make a point, the first step is to size the market. Crypto assets under management grew by 22.9% per year from 2017 to 2025, outpacing other assets including gold and emerging-market debt.

That growth lifted crypto from USD 600 billion at end-2017, or around 0.5% of the GMP including crypto, to a peak of USD 4.4 trillion in Q4 2025. After a 45% decline since then, it still stood at USD 2.4 trillion, or 1.1% of the global GMP, by 31 March 2026.

The cryptocurrency market remains highly concentrated. Bitcoin accounts for 56.1% of total crypto value, followed by Ethereum and Tether, while the top eight cryptocurrencies represent nearly 90% of the market. The accompanying table below summarizes the largest crypto assets by launch date and market capitalization as of end-Q1 2026.

Institutional interest in crypto is growing

Institutional access has been the next major catalyst. Futures-based Bitcoin ETFs launched in 2021, followed by spot Bitcoin ETFs in January 2024 and Ethereum ETFs in October 2024. By Q1 2026, Bitcoin ETF assets had reached USD 88.4 billion, or 87.5% of the crypto ETF market, broadening access and reinforcing Bitcoin’s dominance.

Bitcoin’s investment case rests on scarcity, a fixed 21 million supply cap, four-year halvings and nearly 20 million coins already in circulation, alongside historically low correlations to traditional assets. ETF adoption and institutional demand have therefore helped shift Bitcoin from a niche exposure toward a more recognized, though still speculative, asset class. Meanwhile, crypto treasury holdings rose from roughly USD 4 billion at end-2020, all in Bitcoin, to USD 143 billion by 31 March 2026. Bitcoin still accounted for 86.2%, with institutions and public companies holding more than 1.8 million BTC, or about 8.9% of supply.

Beyond Bitcoin, stablecoins provide the clearest link between crypto and traditional finance. Their market capitalization stood at USD 0.3 trillion, or 13% of total crypto value, with USDT and USDC making up 87% of the stablecoin market and 2% of US Treasury bill holdings. DeFi shows both the promise and fragility of open financial infrastructure. It came under pressure in Q1 2026 as asset prices fell and withdrawals rose, but decentralized exchanges doubled their market share, signaling continued demand for on-chain trading rails.

Taken together, the market has become more established and more connected to traditional finance. But adoption alone does not settle the allocation case: the portfolio evidence still argues for cautious and opportunistic positioning.

Crypto now exceeds 1% of a GMP

If crypto as a whole has become more accessible, it has not grown more stable. For strategic portfolios, Bitcoin still shows unstable returns, high risk and difficulty in assessing long-term expected return. The impressive past performance that has materialized over a short time window is not a guarantee of future performance. From an investment perspective, Bitcoin and other cryptocurrencies can be classified in the collectible category with a few currency-like features but do not generate any income. If the strategic case is not visible, there is potential for additional portfolio returns through the disciplined application of trend-following strategies and through an investment framework that analyses market regimes and investor's sentiment. Especially for Bitcoin, which benefits from the longer history, crypto assets have shown promising results on a tactical basis, even at a small dose.

The table below highlights some of these challenges: Bitcoin’s latest 3-month volatility is 59.4%, well above gold at 40.0% and global equities at 12.5%–19.6%. Returns are also highly start-date dependent. Bitcoin’s 5-year return is near flat, while its 10-year return is exceptionally strong; gold and equities are far more consistent across horizons.

Figure 4: Bitcoin’s return comes with exceptional volatility

Asset	Latest 3M rolling vol (annual)	5-year annual return	5-year annual risk	10-year annual return	10-year annual risk
Bitcoin	59.4%	3.0%	55.7%	66.5%	65.4%
Gold	40.0%	22.3%	17.5%	14.2%	15.7%
MSCI ACWI IMI	12.5%	7.3%	13.7%	9.2%	14.6%
MSCI ACWI Growth	19.6%	13.2%	22.9%	17.4%	21.9%

Source: CoinGecko, MSCI, Thomson Reuters, Bloomberg, World Gold Council, State Street Investment Management, as of March 31, 2026. The performance data quoted represents past performance. Past performance does not guarantee future results. Investing involves risk including the risk of loss of principal.

This volatility links to Bitcoin’s core valuation problem: unlike gold, it has no clear anchor. Mining costs are unstable, and adoption-based valuation arguments are in essence circular.

The next chart shows this weakness in market terms: Bitcoin decoupled from equities, selling off sharply despite stable macro conditions. With no clear fundamental catalyst beyond leverage unwinds, the move reinforces Bitcoin’s speculative profile.

The ETF-flow chart points in the same direction: Bitcoin prices have moved closely with flows, and price declines tend to trigger outflows. That leaves the asset more exposed to sentiment and liquidity than fundamentals.

Bitcoin has not yet behaved like digital gold. During the post-pandemic inflation surge from 2022 through mid-2024, gold strengthened its role as an inflation hedge, while Bitcoin’s link to inflation expectations stayed weak and its drawdowns remained sharp. As the chart shows, Bitcoin has behaved more like a speculative asset than an inflation hedge.

Scarcity is not enough to make Bitcoin a true rival to gold. Gold and Bitcoin both rely on scarcity and belief, but gold also benefits from jewelry demand, industrial use, monetary history and central-bank sponsorship. Bitcoin lacks those anchors: it has no aesthetic or industrial utility, remains inefficient as a payment medium and has limited reserve-asset adoption. Without durable utility beyond speculation, Bitcoin cannot yet rival gold as protection against currency erosion or government seizure.

ETFs improve access, not the underlying asset. ETFs improve access and custody, but they do not solve suitability. They also introduce sponsor, counterparty, basis and tracking risks. Nor do ETFs change the underlying exposure: crypto remains non-cash-flowing and non-credit-quality. There is also limited evidence that ETF launches have reduced volatility.

Be careful with crypto

For investors who view crypto as part of their investable universe, a disciplined approach is key. Aligning allocations with a Global Market Portfolio approach that includes crypto would suggest a weight in the 1-1.5% range, broadly in line with current market capitalization. To mitigate coin-specific risk, exposure can be diversified across four or five of the largest cryptocurrencies, rather than concentrated in a single one.

For the broader and more traditional investor base, the strategic case remains unconvincing, despite Bitcoin’s strong long-term returns. For these investors, the more prudent approach is either to avoid crypto altogether or to treat it as an opportunistic allocation. Those with the skill to exploit momentum and trends may consider deploying a defined tracking error budget toward crypto exposures. We can share our findings in that space for those interested in a tactical approach on crypto.

Disclosure

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