BofA’s Bold Call: Allocate 1%–4% to Crypto as Institutional Demand Skyrockets

Wall Street's old guard just blinked. Bank of America, a titan of traditional finance, is now telling its clients to get serious about digital assets. The recommendation? A 1% to 4% portfolio allocation. This isn't a whisper from the fringe—it's a bullhorn from the mainstream.

The Institutional Stampede Is On

Forget the crypto bros in hoodies. The real money is moving. BofA's advice signals a fundamental shift: major financial institutions can no longer ignore the asset class. Client demand isn't just growing—it's accelerating, forcing legacy players to build bridges to a decentralized future they once mocked. It's the ultimate 'if you can't beat 'em, join 'em' play, dressed in a pinstripe suit.

Why That Magic Number?

The 1%-4% range is a calculated nod to both potential and peril. It's enough to matter if crypto moonshots succeed, but small enough that a crash won't vaporize a portfolio. It's the financial equivalent of dipping a toe in the water while keeping most of your body safely on dry land—a classic Wall Street hedge that lets them claim foresight without full commitment.

One cynical take? This move lets traditional wealth managers finally charge fees on a volatile, hard-to-understand asset—turning disruption into a new revenue stream. The more things change, the more the fee structure stays the same.

The dam has cracked. When a bank that built its empire on centralized trust starts advocating for decentralized ledgers, you know the game has changed forever. The question for investors is no longer 'if,' but 'how much.'

The BofA sets updates to support the growing crypto industry 

Regarding the BofA’s plan to start analyzing four bitcoin ETFs, sources close to the situation noted that the company aims to initiate this strategy beginning January 5th. The firm’s CIO-covered Bitcoin ETFs will 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).

For the 1% to 4% allocation range to digital assets, Hyzy acknowledged that the lower end of his range could be suitable for clients who prefer a careful approach to risk. Those who are willing to take on more risk, he argued, WOULD find the higher end more appealing.

In the past, sources have pointed out that these products were made available to wealthy clients at the Bank of America only upon request. This situation implied that more than 15,000 wealth advisers at the bank could not recommend cryptocurrency options, thereby leaving many retail investors to seek other alternatives.

Nancy Fahmy, head of Bank of America’s investment solutions group, commented on the BofA’s update. She mentioned that this update demonstrated an escalating client interest in gaining access to digital assets.

On the other hand, reports highlighted that Bank of America’s recommendation comes at a time when several leading banks and asset managers are becoming more committed to the crypto ecosystem.

To support this claim, reports released early in October noted that Morgan Stanley’s global investment team suggested an update urging investors and financial advisers to consider allocating 2%-4% of their portfolios to crypto. 

The team referred to this update as “speculative but growing popular asset class that many, though not all, investors will want to look into.” 

Analysts note the increasing acceptance of cryptocurrencies among individuals 

Concerning the growing trend of banks and asset managers shifting their focus towards the crypto ecosystem, analysts conducted research. They discovered that BlackRock advised investors to consider allocating about 1%-2% of their portfolios to Bitcoin at the beginning of 2025.

Additionally, their findings revealed that Fidelity Investments urged its clients to consider a 2%-5% allocation. For its customers aged 30 and under, it recommended an allocation of up to 7.5%.

As cryptocurrencies become increasingly popular among individuals, Cryptopolitan recently reported that Vanguard intends to start permitting some crypto ETFs and mutual funds to be traded on its platform beginning this week.

Vanguard’s recent decision to allow trading of ETFs and mutual funds shows a significant shift from previous sentiments. The firm initially expressed its belief that digital assets were highly volatile and posed substantial risks to major investment portfolios. It is worth noting that this shift in stance was adopted despite the cryptocurrency market experiencing a loss of more than $1 trillion in value since early October.

Other firms have already allowed all their clients to make investments in certain crypto ETFs. Examples include Morgan Stanley, Charles Schwab, Fidelity Investments, and JPMorgan Chase. Notably, crypto-linked ETFs are considered one of the quickly expanding fields in the history of US funds.

Moreover, reports highlighted that Fintech bank SoFi introduced direct crypto trading for retail clients last month. Considering the current situation, analysts have predicted that several banks, including Charles Schwab, Morgan Stanley, and regional lender PNC, may follow this trend.

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