Recommended Cryptocurrencies for Crafting a Protective Investment Portfolio by Wealth Managers
In the ever-evolving world of cryptocurrencies, wealth managers are increasingly recommending a defensive approach to portfolio construction, focusing on assets that offer stability, resilience, and liquidity. This strategy, backed by recent expert analyses, emphasizes Bitcoin (BTC) and Ethereum (ETH) as foundational assets, often complemented by stablecoins for added hedging and liquidity management.
Why Bitcoin and Ethereum?
Bitcoin, often referred to as "digital gold," benefits from the largest market capitalization, broad institutional adoption, and steady inflows into Bitcoin exchange-traded products (ETPs). Its dominant role in portfolios enhances stability and acts as a hedge within the crypto space. Ethereum, on the other hand, is recommended for its strong institutional interest and foundational role in decentralized finance (DeFi) and smart contracts.
Role of Stablecoins
Stablecoins, such as USDC, are essential components of a defensive portfolio. Allocations of 5–15% to stablecoins act as liquidity buffers and hedges against downturns, reducing overall portfolio volatility.
Chainlink (LINK)
While not specifically highlighted as a core defensive asset, Chainlink is known for its decentralized oracle services that provide real-world data to smart contracts, contributing to Ethereum's ecosystem. Although possessing utility and resilience within DeFi, it is often considered more of a mid-cap token relative to BTC/ETH and may carry higher risk than the two large-cap leaders.
Additional Notes on Defensive Strategies
Diversification beyond just Bitcoin and Ethereum is recommended, including mid-cap tokens like Polygon, Arbitrum, and some stablecoins to balance growth and risk. Position sizing and risk management strategies are crucial, with larger allocations to stable, liquid assets and smaller to volatile small caps optimizing defensive postures. Many managers also leverage AI-driven analytics for portfolio optimization and automated stop-loss/take-profit orders to enforce discipline and limit losses.
In conclusion, wealth managers in 2025 advocate primarily for Bitcoin and Ethereum as the backbone of a defensive crypto portfolio due to their stability, resilience, and liquidity, supplemented by stablecoins for risk hedging and cash management. Chainlink is valued but more as a selective mid-cap holding rather than a core defensive asset. Building a defensive crypto portfolio does not imply renouncing growth, but optimizing exposure to assets with solid fundamentals, practical utility, and institutional support.
In the realm of a defensive crypto portfolio, Bitcoin and Ethereum, with their large market capitalizations, institutional adoption, and utilities in providing stability and resilience, are often front-and-center recommendations for wealth managers. To further manage risk and provide liquidity, stablecoins like USDC are essential, serving as a buffer against downturns and reducing overall portfolio volatility.
