Strategic Investment Decisions in Traditional Assets with Cryptocurrencies: A 2020–2025 Study
DOI:
https://doi.org/10.7250/eb-2026-0002Keywords:
Cryptocurrency investment, portfolio optimization, investment strategies, rebalancing, behavioural financeAbstract
This study examines how including cryptocurrencies reshapes portfolio outcomes and investment strategy performance in highly volatile markets. Using historical data from 2020–2025 and optimization methods by Markowitz and Black–Litterman (BL), three widely used strategies were tested: Buy-and-Hold, Dollar-Cost Averaging (DCA), and Rebalancing. Portfolios included equities, ETFs, bonds, gold, and cryptocurrencies (Bitcoin, Ethereum) with crypto weights of 0 %, 10 %, and 20 %. Performance was evaluated with return-based (CAGR) and risk-adjusted indicators (Sharpe, Sortino, Calmar, Ulcer Index). Results show higher crypto allocations boost long-term returns but increase volatility and drawdowns, especially under Buy-and-Hold. Rebalancing reduces downside risk and stabilizes outcomes, while DCA supports disciplined accumulation but underperforms in growth and efficiency. Markowitz favours bond-heavy conservative portfolios, whereas BL highlights equity exposure and better reflects investor views. No universal “best” strategy exists; choices should reflect risk tolerance, behaviour, and investment horizon. The study systematically compares strategies and offers insights on how crypto assets alter the risk–return balance, bridging theory and practical decision-making.
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