Bank of America’s Bold Move: Advises Wealth Clients to Allocate 1–4% to Crypto

Wall Street's crypto cold war just got a lot warmer.

Bank of America—yes, that Bank of America—is now formally telling its wealth management clients to consider putting skin in the digital asset game. The recommended slice? A modest but meaningful 1–4% of a portfolio. It's not a full-throated endorsement, but for a traditional banking titan, it's a seismic shift in posture. Call it a carefully calculated toe-dip into the digital deep end.

From Skepticism to Strategy

For years, major institutions treated crypto like a fringe asset class, best left to retail speculators and tech evangelists. That narrative is officially crumbling. This guidance signals a pivotal recognition: digital assets are now a legitimate component of a diversified modern portfolio. The bank isn't recommending a YOLO into memecoins; it's framing crypto as a strategic hedge and growth satellite—a tiny allocation with asymmetric upside potential.

The Fine Print of FOMO

Don't mistake this for unbridled optimism. The 1–4% range is classic institutional risk management. It's enough to matter if crypto moons, but not enough to crater a portfolio if it tanks. It’s a hedge against both regret and ruin—a masterclass in covering all bases, Wall Street style. Some might see it as prudent; others as the ultimate 'have your cake and eat it too' move from an industry finally conceding it can't ignore the trend.

The move pressures other legacy wealth managers to formalize their own crypto stances. When one of the biggest players in the game sets a benchmark, the herd tends to follow. Expect a wave of 'me-too' research notes and cautiously worded allocation models in the coming quarters.

So, is this the final stamp of mainstream approval? Not quite. But it's a powerful signal that the old guard is done watching from the sidelines. They're building the lifeboats, just in case the ship they've been sailing on is the one that's actually sinking.

Bitcoin ETFs to be covered in January

Starting January 5, Bank of America will begin covering four Bitcoin ETFs that advisers can recommend:

• Bitwise Bitcoin ETF (BITB)
• Fidelity Wise Origin Bitcoin Fund (FBTC)
• Grayscale Bitcoin Mini Trust (BTC)
• BlackRock iShares Bitcoin Trust (IBIT)

These ETFs allow clients to invest in Bitcoin without holding the cryptocurrency directly, providing a regulated avenue for exposure. Hyzy suggested that conservative investors stick closer to 1%, while those more comfortable with risk could consider up to 4%.

Wall Street moves toward crypto

Bank of America’s guidance is part of a broader trend on Wall Street. Morgan Stanley recently suggested 2%–4% of a portfolio could be allocated to crypto, BlackRock has recommended 1%–2%, and Fidelity suggested 2%–5%, with up to 7.5% for investors under 30. 

Vanguard recently announced it will start offering some crypto ETFs and mutual funds on its platform, giving investors another way to get exposure to digital assets.

Other banks, including Charles Schwab, JPMorgan Chase, and Morgan Stanley, already let clients invest in certain crypto ETFs. Fintech platforms like SoFi are expanding direct crypto trading for retail investors, and more banks are expected to follow.

Regulatory changes encourage banks

A big reason more banks are getting into crypto is that the rules have become clearer. The TRUMP administration rolled back some of the Biden-era restrictions that limited what banks could do with digital assets. That gives them more freedom to offer trading, custody, and advisory services.

Even so, a lot of banks are still waiting for Congress to pass laws that lay out clear federal oversight for crypto. Some are experimenting already, trying to figure out the best way to offer these services to clients. JPMorgan, for instance, allows Chase credit card holders to fund accounts on Coinbase, though its wealth advisers haven’t received formal guidance yet.

Volatility remains a risk

The timing comes as cryptocurrencies continue to experience swings. bitcoin reached above $126,000 in early October but has since fallen roughly a third, trading around $85,000 on Monday. Year-to-date, bitcoin is down about 10%, while the S&P 500 has risen over 15%.

The ups and downs in the crypto market show why banks suggest keeping crypto allocations small, since it is still a high-risk investment. Even so, Bank of America’s new guidance shows that digital assets are starting to be seen as a small, strategic part of a diversified portfolio, rather than just a risky experiment.

Now, Bank of America’s wealth clients can use regulated crypto products and talk to advisers freely about digital assets. For a lot of investors, this makes getting involved in crypto much easier and less risky than before.

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