Translated by: Baihua Blockchain

Since its launch in January 2024, the Bitcoin Exchange Traded Product (ETP) platform has attracted over 55 billion dollars in inflows, paving the way for the subsequent launch of ETH and SOL ETPs. As the range of available cryptocurrency investment tools expands, many investors are beginning to ask: should digital assets be allocated? If so, aside from Bitcoin, should ETH and/or SOL be held simultaneously?

To assess the role of these assets in a portfolio, we focus on two questions:

1. How high is the correlation of digital assets with other asset components in a typical portfolio?

2. Historically, what combination of BTC, ETH, and SOL has provided the greatest diversification benefits?*

Historically, across a complete four-year crypto cycle, the correlation between Bitcoin and traditional asset classes has remained relatively low. Although the emergence of futures, ETFs, and ETPs has created a tighter connection between cryptocurrencies and financial markets, evolving these correlations, Bitcoin has overall preserved characteristics that distinguish it from many traditional assets.

However, when investors expand their view beyond Bitcoin, the questions become more complex. The liquidity of ETH and SOL is generally less than that of Bitcoin, and their volatility is higher. Since early 2026, the volatility of ETH and SOL has been approximately 35% and 44% higher than Bitcoin, respectively. This means that diversifying within crypto assets often raises overall portfolio volatility. Whether such diversification is valuable depends critically on correlation. A high-volatility asset could actually weaken diversification benefits if it moves in tandem with other assets in the portfolio; conversely, if its trend differs from other assets, it could enhance diversification effects.

Historically, SOL has always been a more effective diversification asset than ETH. As of April 2026, the correlation between Bitcoin and ETH over the past four years has been 0.78; in contrast, the correlation between SOL and Bitcoin has been 0.72. This means that on a weekly performance basis, the likelihood of SOL moving in the same direction as Bitcoin is slightly lower. More importantly, when SOL does not move in the same direction as Bitcoin, it has historically also been less likely to move in the same direction as other components of traditional portfolios (such as stocks) compared to ETH. The correlation of SOL with the S&P 500 is slightly lower than that of Bitcoin and ETH. If historical correlation is still meaningful, SOL may be better suited as a diversification tool than ETH.

Of course, not all investors hold digital assets for diversification purposes. We believe that investors allocate digital assets for roughly three reasons. Investors who view cryptocurrencies as "digital gold" may still prefer Bitcoin. Those focusing on blockchain adoption and financial disruption trends may be more willing to allocate BTC, ETH, and SOL simultaneously, as these technologies are penetrating different serviceable markets. As for investors whose primary goal is diversification, they may consider holding only Bitcoin or adopting a BTC+SOL combination.

We do not provide advice on whether investors should buy, sell, or hold BTC, ETH, SOL, or any other assets. Historical relationships may not continue, and the diversification characteristics demonstrated in the past should not be seen as indicators of future outcomes. However, as the digital asset ecosystem gradually expands from "only Bitcoin" to more assets, investors may increasingly realize that the truly important question is not whether to diversify within crypto, but how to diversify.

Diversification cannot eliminate the risk of loss.

Article link: https://www.hellobtc.com/kp/du/07/6383.html

Source: https://www.coindesk.com/coindesk-indices/2026/07/15/crypto-long-and-short-to-eth-or-not-to-eth-is-sol-the-better-diversifier