Last month, I wrote about the importance of embracing—not running from—crypto’s volatility. Volatility has been the longest running critique of this emerging asset class, and for the last decade I’ve had advisors and other professional investors tell me this is the main reason they don’t recommend a crypto allocation to their clients. 

This is starting to change. An increasing number of advisors I speak with are beginning the conversation with an understanding that they should not be scared away from crypto’s evolving volatility profile.  

Why? I think there are two major reasons. 

First, the question of whether crypto belongs in an institutional portfolio is no longer theoretical. After years of live data across multiple market cycles—including some of the most volatile macro environments in recent memory—the evidence is difficult to ignore.

The conclusions for how crypto can fit within diversified portfolios are consistent: a small to modest allocation to crypto has the potential to meaningfully improve risk-adjusted returns without introducing proportionally greater risk. 

For example, between the launch of the Nasdaq CME Crypto Index (NCI) in June 2020 and December 2025, the NCI delivered an annualized return of 46%—more than three times the S&P 500's 15% over the same period. Cumulatively, that's 803% for the NCI versus 124% for the S&P 500. But raw returns only tell part of the story. What's more instructive is the consistency. The NCI was the top-performing asset class in four out of the six years we analyzed, finishing ahead of equities, bonds, commodities, and the dollar.

 

Crypto outperformed all major traditional asset classes in four of the last six years

^{Past performance does not guarantee future results. Commodities are represented by the BCOM Index and Global HY is represented by LG30TRUU Index. You cannot invest directly in an index and its performance shown excludes fees, costs, and expenses incurred by actual funds. 2020 data starts June 1st, reflecting the earliest date in Nasdaq's official backtest of the NCITM. Crypto assets are highly volatile and are not backed by any government or central bank. The regulatory environment for crypto assets is evolving and uncertain, and changes in laws or regulations could adversely affect the value or liquidity of crypto assets. Elaborated by Hashdex Asset Management with data from Bloomberg from June 1st, 2020 to December 31, 2025.}

 

Second, advisors are becoming more aware of the importance of putting crypto’s volatility into context. Crypto's volatility has been declining steadily. The gap between the NCI and traditional risk assets narrowed from 66% in 2021 to just 31% in 2025—a 35% reduction in five years, with the trend continuing.

NCI volatility vs. average of other risk assets: the gap has narrowed significantly 

 

^{Volatility data reflects past price changes. Actual volatility may differ due to market conditions, economic events, or other factors. Commodities are represented by the BCOM Index and Global HY is represented by LG30TRUU Index. The average other asset classes volatility is composed by S&P 500, Commodities, MSCI Europe and MSCI ACWI. 2020 data starts June 1st, reflecting the earliest date in Nasdaq's official backtest of the NCI. Crypto assets are highly volatile and are not backed by any government or central bank. The regulatory environment for crypto assets is evolving and uncertain, and changes in laws or regulations could adversely affect the value or liquidity of crypto assets. Elaborated by Hashdex Asset Management with data from Bloomberg from June 1st, 2020 to December 31, 2025.}

 

And, when you compare the NCI to the “Mag 7” technology companies, the volatility picture looks entirely different. The NCI's annualized volatility of 59% over the 2020–2025 period places it squarely within the range of Tesla (62%), Nvidia (50%), and Meta (42%). If your portfolio already holds significant equity exposure, you are almost certainly holding assets with volatility in the same range as crypto. 

Perhaps most compelling is how effectively even a modest crypto allocation enhances portfolio outcomes. We modeled the impact of introducing the NCI into a traditional 60/40 portfolio at sizes ranging from 2.5% to 10%, allocated proportionally from both the equity and fixed income components. At a 10% NCI allocation, annualized returns rose from 7.6% to 13.4%, a 76% increase, while volatility increased by just 28%.

 

A crypto allocation has historically improved returns and Sharpe Ratios

^{Past performance does not guarantee future results. You cannot invest directly in an index and its performance excludes fees, costs, and expenses incurred by actual funds. The 60/40 allocation is 60% “SPX Index” and 40% “LEGATRUU Index”. NCI allocations replace x% of the 60/40 portfolio with the NCI. Rebalanced every 90 days. Elaborated by Hashdex Asset Management with data from Bloomberg from June 1st, 2020 to March 31, 2026.}

 

Crypto has clearly matured considerably as an asset class, and it's exciting to hear more advisors speak about the opportunity it presents—without being scared away by its volatility. 

The real question today is how much of a portfolio allocation is appropriate given their specific objectives and constraints. Not every investor has the same risk tolerance, of course, but even a small 1% allocation is in line with crypto’s portion of global investable assets. Ultimately, the cost of under-allocation is real—not because of fear of missing out, but because the portfolio construction benefits are quantifiable and consistent. For advisors willing to engage seriously with the evidence, the case for a crypto allocation has never been stronger.

 

 

______________________

^{Effective January 20, 2026, the index changed its name from Nasdaq CryptoTM Index (NCI) to Nasdaq CME Crypto Index (NCI).}

^{This material expresses Hashdex Asset Management Ltd. and its subsidiaries and affiliates (“Hashdex”)'s opinion for informational purposes only and does not consider the investment objectives, financial situation or individual needs of one or a particular group of investors. We recommend consulting specialized professionals for investment decisions. Investors are advised to carefully read the prospectus or regulations before investing their funds.}

^{The information and conclusions contained in this material may be changed at any time, without prior notice. Nothing contained herein constitutes an offer, solicitation or recommendation regarding any investment management product or service. This information is not directed at or intended for distribution to or use by any person or entity located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Hashdex to any registration or licensing requirements within such jurisdiction.}

^{These opinions are derived from internal studies and do not have access to any confidential information. Please note that future events may not unfold as anticipated by our team’s research and analysis. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of Hashdex.}

^{By receiving or reviewing this material, you agree that this material is confidential intellectual property of Hashdex and that you will not directly or indirectly copy, modify, recast, publish or redistribute this material and the information therein, in whole or in part, or otherwise make any commercial use of this material without Hashdex’s prior written consent.}

^{Investment in any investment vehicle and crypto assets is highly speculative and is not intended as a complete investment program. It is designed only for sophisticated persons who can bear the economic risk of the loss of their entire investment and who have limited need for liquidity in their investment. There can be no assurance that the investment vehicles will achieve its investment objective or return any capital. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time.}

^{Nothing herein is intended to imply that the Hashdex s investment methodology or that investing any of the protocols or tokens listed in the Information may be considered “conservative,” “safe,” “risk free,” or “risk averse.” These opinions are derived from internal studies and do not have access to any confidential information. Please note that future events may not unfold as anticipated by our team’s research and analysis.}

^{Certain information contained herein (including financial information) has been obtained from published and unpublished sources. Such information has not been independently verified by Hashdex, and Hashdex does not assume responsibility for the accuracy of such information. Hashdex does not provide tax, accounting or legal advice. Certain information contained herein constitutes for ward-looking statements, which can be identified by the use of terms such as “may,” “ will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” “believe” (or the negatives thereof ) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results, the ultimate business or activities of Hashdex and its investment vehicles or the actual performance of Hashdex, its investment vehicles, or digital tokens may differ materially from those reflected or contemplated in such forward-looking statements.}

^{As a result, investors should not rely on such forward- looking statements in making their investment decisions. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of Hashdex’s investment vehicles or the adequacy of the information contained herein.}

^{Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular digital asset or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any digital asset or any representation about the financial condition of a digital asset. Statements regarding Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate assets before investing. ADVICE FROM A FINANCIAL PROFESSIONAL IS STRONGLY ADVISED.}