Building a crypto portfolio: the four largest coins move in step at 0.82 to 0.90

Building a crypto portfolio comes down above all to one thing: deciding how much weight each holding gets. Take the four largest crypto assets for that purpose and you are spreading less than you think. The daily moves of Bitcoin, Ethereum, Solana and XRP ran almost in parallel over the past twelve months, with correlations between 0.82 and 0.90. Four names in a portfolio are therefore not yet four risks.

This article sets out the yardsticks investors use to weight, what a year of price data on the four actually supports, and the part played by holding periods, fees and the route you buy through. A recommendation on which split is right for you is not here: that depends on your investment horizon, your income and your capacity to bear risk, and only you know those.

What a crypto portfolio actually is

A portfolio is the sum of your positions together with their shares of the total value. What matters is not the list of coins but their weight: two assets split 90 to 10 behave entirely differently from the same two split 50 to 50. Weighting is therefore the real decision, and it is often taken in passing, by simply buying whatever is in the news.

To be kept separate from that is allocation, the share of your total wealth that cryptocurrencies make up. Someone holding 2 percent of their wealth in crypto has a different problem from someone at 40 percent, even with an identical split inside the crypto part. The two levels belong under separate consideration.

The third quantity is the investment horizon. It determines whether a fall of half the value is a paper loss you can sit out or a real loss, because the money is needed. Money earmarked for the next few years belongs outside this calculation.

Market capitalisation as a yardstick: Bitcoin carries just under 59 percent of the total market

The most widely used yardstick is market capitalisation, the price times the number of circulating units, and thus a measure of a coin's weight in the market. On data from CoinGecko, the entire crypto market stood at around 2,559 billion euros on October 2. Bitcoin supplied 58.75 percent of that, Ethereum 11.29 percent, XRP 3.20 percent and Solana 2.41 percent.

Weight the four by that yardstick and you land on a very lopsided split. Together the four were worth around 1,936 billion euros on the same day, and of that Bitcoin alone carried 77.7 percent, Ethereum 14.9 percent, XRP 4.2 percent and Solana 3.2 percent. A portfolio of these four weighted by market capitalisation is therefore more than three-quarters a Bitcoin portfolio.

That is why many reach for equal weighting instead, 25 percent each. This variant gives the smaller assets markedly more weight than the market does and thereby raises the volatility of the whole, as the section on drawdowns shows. Both yardsticks are defensible, they simply lead to entirely different portfolios, and anyone choosing neither ends up with the random result of their own buying history.

Core and satellite: two roles in a portfolio

Behind the weighting there usually sits a simpler consideration: which position carries the portfolio, and which one is trimming? The core is the part that sets the character of the portfolio and stays put the longest. The satellite is the smaller part, where a total loss hurts but knocks nothing over.

The classification says nothing about the quality of the projects. It only describes how much weight you give to something whose development you do not know. The younger a network, the thinner the trading and the stronger the dependence on a single team, the more an asset belongs in the smaller part.

How to read off the role

Three checkable points help: the depth of trading across several venues, how long a network has run without a major interruption, and whether the price still finds buyers once the topic drops out of the news. None of these says anything about price performance, but all three say something about the risk of not being able to get out.

Twelve months of price data: how closely the four move together

We analysed the daily euro prices of the four assets over the past 365 days and calculated the correlation of their daily returns. A correlation of 1.0 means they move entirely in step, 0 means no relationship, and minus 1 means they move exactly opposite. What matters for spread in a portfolio is how far below 1 the values sit.

• Bitcoin and Ethereum: 0.90
• Ethereum and Solana: 0.88
• Bitcoin and Solana: 0.86
• Bitcoin and XRP: 0.85
• Ethereum and XRP: 0.82
• Solana and XRP: 0.82

No pair sits below 0.82. In practice: on a bad day for Bitcoin, the other three are highly likely to be down as well. Splitting across four assets lowers the risk that one individual project fails, but it barely lowers the risk that the whole market falls. Why more positions change little about this, we showed across a broader field in our piece on correlation in a crypto portfolio.

Over the same period all four were down, and to differing degrees: Bitcoin lost around 27 percent, Ethereum around 38 percent, Solana around 48 percent and XRP around 50 percent. An equally weighted portfolio of the four would therefore have fared worse than Bitcoin alone in this window. That is no argument against spreading. It is a reminder that spreading within one asset class guarantees no return.

Volatility and drawdowns: 52 to 73 percent below the peak

The second half of the weighting question is how much volatility you want in the portfolio. The same daily data yields, for the past twelve months, an annualised volatility of around 45 percent for Bitcoin, 63 percent for Ethereum, 67 percent for Solana and 67 percent for XRP.

More tangible still is the largest drawdown from each asset's own peak within the year. Bitcoin at times sat 52 percent below its high, Ethereum 66 percent, XRP 67 percent and Solana 73 percent. Weight the three smaller assets more heavily than the market does and you are buying precisely these deeper drawdowns.

These figures are the soberest part of the portfolio question, because they promise nothing. What they describe is what happened in a normal year, not the worst that can happen. The size of the amount you commit is therefore the most effective lever you have, more effective than any fine-tuning of the shares.

A total loss remains possible

With every single crypto asset a total loss is possible: through a fault in the network, through the failure of a trading platform, through regulation, or because a project is abandoned. No share in a portfolio is so small that this risk disappears, and no weighting makes it go away.

What spreading within one asset class can achieve

Spreading works against single-name risks, not against market risks. When a network has a serious fault or a team dissolves, that hits one holding and not all of them. This is exactly what the split is for, and exactly why it still works at correlations of 0.85.

Against a market slump it does not help, and with crypto assets that is the more frequent case. Anyone wanting to lower the volatility of their total wealth achieves it through the share crypto holds within it, and through asset classes that behave differently. Inside the crypto part, spreading is protection against bad luck in selection, not protection against the market.

From that follows an uncomfortable but useful insight: more coins do not make a portfolio safer, they only make it harder to oversee. Tracking ten positions whose moves agree to 0.8 costs time and fees and adds little over three positions.

Savings plan or lump sum: two routes into building a position

Building a position is also about the how. A lump-sum purchase commits the entire amount at one price. A savings plan spreads it across many dates and averages the entry price; where prices fluctuate, you buy more units at low prices and fewer at high ones.

The savings plan takes the question of the right moment out of the decision, and that is its real advantage. It does not protect against falling prices: buy monthly into a falling market for a year and you will also end up with losses, merely at a different average price. Which providers offer savings plans on crypto assets, and at what cost, is in our comparison of Bitcoin savings plans.

For weighting, the savings plan has a practical side effect: the shares stay closer to your target split by themselves, because every instalment is distributed by the same key. With a lump sum the weights drift apart as prices move, and they do so most where volatility is greatest.

Fees, spreads and the choice of trading platform

Fees bear directly on the result and are the part you know in advance. Three things are to be distinguished: the stated trading fee per purchase, the spread between the buy and sell price, which often does not appear as a fee at all, and the cost of deposits and withdrawals. On small, frequent purchases the spread weighs more heavily than the percentage on the price sheet.

Then there is the question of who holds the coins. A platform licensed in the European Union is subject to supervisory rules, which neither prevents price losses nor rules out a default risk, but does make the framework clearer. How the various providers are set up is shown in our crypto exchange comparison.

A third point concerns custody. Coins sitting on a trading platform are conveniently tradable and dependent on the provider's continued existence. Coins in your own custody sit with you, and so does responsibility for securing them. For larger amounts with a long horizon, that is the trade-off standing behind the weighting question.

Holding period and tax: what rebalancing triggers

Every reallocation is a taxable event, including a swap from one coin into another. Under section 23 of the German Income Tax Act, gains from private disposals are tax-free where more than a year lies between acquisition and sale; within the year they are taxable to the extent that the exemption threshold for the whole year's gains is exceeded. That threshold applies to the sum of all such gains in a year, not per coin.

For weighting that means: anyone adjusting the shares frequently keeps triggering taxable events and loses holding periods that had already started running. A target split that needs adjusting only rarely is therefore not merely more convenient, it is often the cheaper one too.

Independently of that, the record-keeping duty applies. For every purchase, sale and swap you need the date, the quantity and the euro equivalent, otherwise the holding period cannot be evidenced later. For the crypto tax reform that is due to change this system from 2027, that documentation is likewise the basis.

How often a portfolio really needs adjusting

When prices run, the shares shift. If Bitcoin rises more than the rest, its weight grows, and the portfolio becomes more concentrated than planned. Bringing it back to the target weights is called rebalancing.

Two triggers are common. With the calendar trigger you check at fixed intervals, once a year for instance. With the threshold trigger you step in only once a weight has deviated by more than a set band, by a fifth of its target value for example. Where prices fluctuate, the threshold trigger leads to fewer transactions than a short calendar cycle.

The order matters: first the target weights and the trigger, then the execution. Reallocate without a defined target split and you are following the price chart, tending to buy whatever has just risen. Because every adjustment costs fees and holding periods, less often is usually better here than more often.

The most common mistakes in building a crypto portfolio

Four patterns recur. The first is confusing number with spread: twenty positions all hanging on the overall market are one holding in twenty parts. The second is committing money with a short horizon, money that has to be sold when the value halves.

The third is the missing record, which only makes itself felt at the tax return, when acquisition data for purchases from years back is nowhere to be found. The fourth is the constant readjusting to the news, which generates fees and destroys holding periods without measurably changing the portfolio's risk.

What all four have in common is that they can be avoided beforehand and cost money afterwards. None of them has anything to do with the selection of coins.

Building a crypto portfolio: What to take away

The four largest crypto assets moved almost in step over the past year at 0.82 to 0.90, with drawdowns of between 52 and 73 percent from their peaks. Weighting decides more than selection, and the amount committed decides more than the weighting. Three steps that hold regardless of your split:

1. Set the yardstick before you buy. Decide between market capitalisation and equal weighting, write down the target shares and fix a trigger for adjustment. How a set key can be executed across many dates is shown in our comparison of Bitcoin savings plans.
2. Compare costs and venue in advance. The trading fee, the spread and the deposit or withdrawal costs determine what is left of an instalment. Our crypto exchange comparison sets the terms side by side.
3. Match custody to your horizon. What is meant to sit for a long time belongs in your own custody rather than on the trading platform. Which devices are suitable is in our hardware wallet comparison.

(As of October 2, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)