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The origins of the crypto market date back to 2010, when the first cryptocurrency exchange, BitcoinMarket, began operating. Since then, the market has matured significantly. It has entered the financial world’s mainstream with an extended web of centralized and decentralized exchanges, decentralized finance (DeFi) protocols and exchange-traded fund (ETF) products offered by traditional finance (TradFi) providers. Liquidity levels have also risen significantly, with daily crypto trading volumes measured in tens or hundreds of billions.
Despite its ongoing maturation and substantial liquidity levels, the crypto market remains highly volatile. While it might offer high potential returns, there are associated risks. In this environment of elevated volatility, it’s crucial for investors to diversify their holdings by adding other, more stable asset classes to their portfolios. In this respect, the stock market offers some of the best diversification opportunities for cryptocurrency traders. It is established, more relatively stable and less volatile, and it has an abundance of assets with low correlations to crypto.
Key Takeaways:
Adding stocks to a crypto-focused portfolio can provide benefits like diversification to hedge against risk, exposure to technology driving the growth of cryptocurrency and blockchain technology, better risk-adjusted returns, regulatory certainty and better liquidity.
Some of the best stocks a crypto investor might consider include Coinbase (COIN), NVIDIA (NVDA), Meta Platforms (META) and JPMorgan Chase & Co. (JPM).
Any financial market has its own share of risks, but they are particularly noticeable in highly volatile markets, including the cryptocurrency market. Even the most stable and actively traded crypto assets, such as Bitcoin (BTC) and Ethereum (ETH), feature notably higher volatility levels than most equities. This volatility creates opportunities for outsized returns, but it also heightens the trading risk. Investors are using several strategies to reduce risk, among which portfolio diversification is one of the most popular and frequently employed.
The theory of portfolio diversification was first introduced in 1952 when economist Harry Markowitz noted that holding different assets with low or negative correlations to each other could act as a powerful hedge against market risks. This is how the modern portfolio theory (MPT) was born. Since then, it has been used successfully in various markets and has been established as a key tool to reduce investment risks.
Based on the principles of MPT, investors can diversify a cryptocurrency-focused portfolio by adding stocks to it. In general, while the crypto and stock markets have had periods of low and high correlations with each other, these asset classes are considered sufficiently dissimilar and driven by somewhat different forces, making them an ideal match in a well-diversified portfolio.
At Bybit, you can easily diversify into stocks via Bybit TradFi, which now offers stock trading through contract for differences (CFDs) for 78 major stocks.
Besides reducing risk through diversification, crypto investors gain other significant benefits when they extend their reach to the equities market. Among these is access to stable and well-regulated assets linked to the growth of the crypto and blockchain industries. For instance, a subset of the stock market is represented by companies that facilitate crypto investment via regulated channels.
Some institutional investors offer products like spot and futures ETFs based on BTC and ETH. Notable examples include BlackRock (BLK), Robinhood (HOOD) and Charles Schwab (SCHW). Crypto investors may diversify into the stock market by holding ETFs offered by these funds and investing in their equities directly.
Another group of companies includes infrastructure providers or technological enablers of crypto and blockchain tech. Notable stocks in this area are Alphabet (GOOG), Coinbase (COIN) and Block (XYZ).
By choosing the stocks of these companies, investors can gain indirect exposure to the long-term growth potential of the crypto or blockchain sectors.
Technology companies like Apple (AAPL) and NVIDIA (NVDA) play a key role in driving growth in many of the niches that are also important for the development of the cryptosphere. These include areas like artificial intelligence (AI), cloud computing, fintech, augmented reality (AR) and virtual reality (VR), the Internet of Things (IoT) and big data. Investing in stocks of companies in these segments may also provide exposure to technologies underpinning the growth of crypto.
The crypto environment is known for featuring high-growth and high-risk opportunities. Growth rates in the stock market are typically considered to be on a lower scale, but for a long-term-focused investment, stocks may provide better risk-adjusted returns. And, as noted earlier, combining crypto and stocks in a well-diversified portfolio may be the optimal strategy — crypto for big gains in the short term, stocks for long-term stability and peace of mind!
This strategy can be particularly useful during crypto bear markets, when BTC and other key cryptocurrencies lose ground, while many stocks may continue on their slow but steady upward course.
Purchasing stocks can also give crypto investors access to a higher-liquidity, more regulated, credible market. While the crypto market’s liquidity levels have risen to respectable levels, they are far lower than the liquidity offered on the stock exchanges. Typical daily trading volumes in stocks are at least half a trillion USD, often more, which is about three to four times as high as in the crypto market. Stocks also offer better protection to investors because they are regulated.
Coinbase (COIN)
Having been recently added to the S&P 500 (on May 13, 2025), COIN is by far the most high-profile and highest-capped stock directly linked to the crypto industry. As the operator of one of the world’s largest cryptocurrency exchanges, Coinbase acts as the flagman of crypto representation on the stock market. Many analysts believe that COIN is so intertwined with the crypto industry that its stock is likely to correlate with major cryptos, particularly Bitcoin, too strongly for a well-diversified portfolio.
However, the data doesn’t support this seemingly intuitive assumption. As of the time of writing on May 28, 2025, COIN stock’s one-year correlation with BTC stands at 0.35. This reveals that their price changes are not closely related, making it a surprisingly weak proxy for direct BTC exposure despite being a major crypto exchange. However, it is imperative to note that this correlation fluctuates over time depending on factors like market conditions and Coinbase’s development.
NVIDIA (NVDA)
NVDA is among the stock market’s star performers of the last few years. The world’s dominant producer of graphics processing units (GPUs), NVIDIA’s growth has partly been driven by the strong demand from the blockchain industry. The company’s products are used extensively in crypto mining machines, metaverse and web3 gaming applications, decentralized computing platforms, web3-linked AI solutions and more.
As the blockchain and crypto sectors develop, NVIDIA is expected to continue playing a key role in supporting these industries.
Meta Platforms (META)
Mark Zuckerberg’s Meta Platforms has never hidden its ambitions in relation to the metaverse, AI, payment infrastructure solutions and other niches highly intertwined with crypto-related technologies.
The company has the highest potential consumer base on file, with around 3.6 billion users (close to 80% of the entire internet population) across all Meta-owned platforms. As crypto makes further inroads into the mainstream consumer’s world, Meta will undoubtedly leverage its enormous user community to benefit from this growth.
Owning META stock opens up unparalleled opportunities to benefit from the company’s expected leadership on the consumer side of crypto applications.
JPMorgan Chase & Co. (JPM)
Owning a non-tech stock may also be a great idea for a well-diversified portfolio. While tech companies might be affected by the same technology cycles that influence the blockchain industry, stocks in areas like banking provide exposure to a different market segment. And among banking stocks, few can rival the stability, credibility and long-term potential of JPMorgan Chase & Co., the leading banking company in terms of market capitalization. If there’s a beacon of stability among blue chips in the market, it would be JPM.
The corporation has also recently embraced a more pro-crypto stance by allowing customers to buy crypto through the bank, albeit without providing custody services. It has even released a stablecoin, WSJ, with other top banks — Bank of America, Citigroup and Wells Fargo.
JPM’s unique blend of TradFi services with emerging crypto asset alignment makes investing in its stock a strategic move for those seeking resilience and relevance in the digital asset era.
Combining crypto and stocks is one of the best hedges against market turbulence and bear markets. As a crypto investor, owning equities in your portfolio ensures a long list of benefits, including but not limited to diversification, access to institutional growth, exposure to technology driving the crypto and blockchain revolutions, more stable returns over the long term, regulatory protections, credibility and access to a more liquid market.
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