3 Types of Cryptocurrencies That Can Diversify a Tech-Heavy Portfolio

If you're looking to diversify a tech-heavy portfolio with cryptocurrency, you need to be careful. Historically, cryptocurrency -- as a classic "risk-on" asset -- tends to be positively correlated with the tech market. In other words, as tech goes, so goes crypto (most of the time).

But there are a number of notable exceptions. A handful of top cryptocurrencies could provide remarkable diversification benefits, as long as you're willing to keep a close eye on correlations between different asset classes.

1. Bitcoin

The favorite choice of hedge fund managers and large institutional investors is Bitcoin (CRYPTO: BTC). While there are brief periods of time when Bitcoin trades like a tech stock, more often, it does not. In fact, most of the time, Bitcoin is completely uncorrelated with any major asset class. For that reason, Bitcoin has earned the moniker "digital gold."

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According to a March 2024 study from WisdomTree (NYSE: WT), Bitcoin is neither positively nor negatively correlated with the stock market. It tends to march to the beat of its own drummer, which is what makes it so valuable. It can zig when other assets zag. In the period from 2012 to 2023, Bitcoin's correlation with the stock market primarily stayed in a range between 0.2 and -0.1.

2. Gold stablecoins

Gold is arguably still the best hedge against the stock market declining in value, and for that reason, gold stablecoins deserve a closer look. The two biggest gold stablecoins are Pax Gold (CRYPTO: PAXG) and Tether Gold (CRYPTO: XAUT), both of which now have market caps in excess of $1.6 billion.

These stablecoins, rather than being pegged to the U.S. dollar, are instead pegged to the price of gold. Thus, as gold moves higher, so will these stablecoins. In 2025, gold prices rose nearly 70%, and gold stablecoins followed suit, becoming some of the top-performing cryptocurrencies in the process.

3. Small niche altcoins

While no cryptocurrencies are fully negatively correlated with tech stocks (meaning they move up when tech stocks move down), there are some smaller, niche altcoins that clearly follow their own path. Their price behavior is much more based on tech upgrades, new product features, or technical factors, rather than what's happening in the broader market.

Last year, the place to be was privacy coins. Two privacy coins -- Zcash (CRYPTO: ZEC) and Monero (CRYPTO: XMR) -- soared in value, driven by concerns over online privacy and blockchain surveillance. Quite simply, if you don't want someone snooping on your online crypto transactions, then you can move your money into privacy coins. Anytime you make an online transaction with these coins, you can remain completely anonymous.

Bitcoin or gold?

Of the three options listed above, the clear top pick is Bitcoin. Maybe the "Bitcoin is digital gold" investment thesis needs a closer review these days, but it's impossible to ignore Bitcoin's historical lack of correlation with any major asset class.

Yes, gold stablecoins have some appeal, but why not just buy a gold ETF, rather than going through the elaborate step of investing in a cryptocurrency designed to act like gold?

There's a good reason why billionaire hedge fund managers are among the biggest buyers of Bitcoin. It's easily the best crypto to hedge your exposure to the broader tech market.

Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool recommends Monero and WisdomTree. The Motley Fool has a disclosure policy.