Major financial institutions are increasingly embracing Bitcoin, indicating a growing institutional interest in regulated digital asset products. Bank of America, the second-largest bank in the United States, has reportedly advised its wealth management clients to consider a cryptocurrency allocation ranging from 1% to 4% through its Merrill, Bank of America Private Bank, and Merrill Edge platforms.
"For investors with a strong interest in thematic innovation and comfort with elevated volatility, a modest allocation of 1% to 4% in digital assets could be appropriate," stated Chris Hyzy, chief investment officer at Bank of America Private Bank.
Effective January 5, Bank of America will provide its clients access to four new Bitcoin (BTC) exchange-traded funds (ETFs). These include the Bitwise Bitcoin ETF (BITB), Fidelity’s Wise Origin Bitcoin Fund (FBTC), Grayscale’s Bitcoin Mini Trust (BTC), and BlackRock’s iShares Bitcoin Trust (IBIT). This development marks the first time the bank's wealthiest clients can gain exposure to Bitcoin ETFs, which were previously only available upon request. Prior to this, the bank's over 15,000 wealth advisors were not permitted to recommend any cryptocurrency investment products.
"Our guidance emphasizes regulated vehicles, thoughtful allocation, and a clear understanding of both the opportunities and risks," added the bank's chief investment officer.
This recommendation from Bank of America aligns with a broader trend of institutional appetite for regulated cryptocurrency investment products. It follows Vanguard, the world's second-largest asset manager, enabling crypto ETF trading for its clients, a reversal of its prior stance on digital asset ETFs.
Cointelegraph has reached out to Bank of America for further details regarding its crypto allocation recommendations.
Bank of America is a leading financial institution in the US, holding approximately $2.67 trillion in consolidated assets and operating over 3,600 branches, according to Forbes.
Institutional Playbook for Bitcoin Allocation
BlackRock, the world's largest asset management firm, was among the first major institutions to recommend a Bitcoin allocation of up to 2% to its clients, as reported by Cointelegraph in December 2024. At the time, BlackRock noted in a report that an allocation of approximately 1% to 2% is a "reasonable range for Bitcoin exposure," carrying the "same share of overall portfolio risk" as a typical allocation to the "magnificent 7" group of large-cap technology stocks. The "magnificent 7" includes companies such as Amazon, Apple, Microsoft, Alphabet, Tesla, Meta, and Nvidia.
In June, asset management firm Fidelity also advised a Bitcoin allocation of 2% to 5%. This range was considered sufficiently small to mitigate the risk of a Bitcoin crash while being large enough to benefit from BTC's potential as an inflationary hedge.
Earlier in October, Morgan Stanley also suggested a 2% to 4% allocation to crypto portfolios for investors and financial advisors. These recommendations from prominent financial institutions suggest a developing consensus on a strategy for modest, risk-managed exposure to digital assets.