Historically, bitcoin has exhibited relatively low correlations with traditional asset classes over full four-year crypto cycles. While those relationships have evolved as cryptocurrencies have become more integrated into financial markets through futures, exchange-traded funds (ETFs) and ETPs, bitcoin has generally maintained diversification characteristics distinct from many traditional assets.
The question becomes more complicated when investors move beyond bitcoin. Ether and SOL are generally less liquid and more volatile than bitcoin. Since the start of 2026, ether and SOL have exhibited volatility approximately 35% and 44% higher than bitcoin, respectively. Diversification within crypto therefore often increases volatility. Whether that improves diversification depends on correlations. A volatile asset moving in the same direction as the rest of the portfolio may reduce diversification benefits, while one moving differently may enhance them.
Historically, SOL has acted as a better diversifier than ether. Over the four years through April 2026, bitcoin’s correlation with ether was 0.78. By contrast, SOL’s correlation with bitcoin was 0.72. Thus, SOL was slightly less likely to move in the same direction as bitcoin each week. More importantly, when SOL did not move in the same direction as bitcoin, it was historically less likely than ether to move in the same direction as other parts of a traditional portfolio, such as equities. SOL’s correlation with the S&P 500 Index was slightly lower than both bitcoin’s and ether’s. If historical correlations are any guide, SOL might act as a better diversifier than ether.
