“Pure cryptocurrencies are not securities and therefore don't replace stocks or bonds in a portfolio. Securities are investments that grant rights with intrinsic value. Stocks provide a share of dividends as well as shareholder votes, and bonds provide loan repayments with more senior creditor rights. These intrinsic values are transparent which allows the market to put a fair price on them known as the risk premium.
Crypto, along with forex, commodities, and art are worth only what the next buyer is willing to pay for them. This allows better traders to profit from worse traders. However, ultimately, there is no intrinsic value and market prices may be extremely volatile.
In terms of portfolio allocations, some investors use derivative contracts to hedge against economic outcomes. For example, gold futures may hedge against inflation. Because it is not a security, crypto may be viewed in this way."
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