Bank of America Recommends up to 4% Crypto Portfolio Allocation

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GM!

Today’s top news:

• Crypto majors pop 7-10% as Vanguard debuts crypto access; BTC at $92,900

• Bank of America recommends up to 4% crypto allocation for wealth clients

• Ethereum’s Fusaka upgrade set to debut today

• Kalshi raises at $11B valuation; co-founder Luana becomes youngest female billionaire

• Pudgy Penguins announce partnership with NHL for Winter Classic

Yesterday it was Vanguard. Today it’s Bank of America.

More and more TradFi giants are reversing course on crypto.

Bank of America’s wealth division has added crypto to its model portfolios for the first time, recommending a 1% to 4% allocation for clients.

The new framework lists digital assets as an acceptable small allocation alongside other alternative investments and will be used by Merrill Wealth Management and Merrill Edge advisors going forward (along with new pitch materials).

Bank of America Endorses Up to 4% Allocation of Wealth Management Portfolios to Crypto: Report

The recommendation applies to both high-net-worth and mass-affluent clients.

This change came just a day after Vanguard expanded access to spot Bitcoin, Ethereum, and XRP ETFs after a multi-year holdout.

The market liked the news, with Bitcoin legging up 2% to near $93,000 and other crypto majors like ETH and SOL jumping 9-10%.

“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.” – Chris Hyzy, Bank of America Private Bank’s chief investment officer

BofA’s decision is just the latest in a series of putting crypto alongside all other top investable assets for wealth management clients.

For many clients, allocations are driven by advisor guidance. Not individual research or selection.

So inclusion in these models can majorly influence adoption.

And the impact of recommendations like this is twofold:

• upfront portfolio re-balancing (bigger, one-time flows)

• ongoing buying as funds are directed into the market (the infinite twap)

As a reminder, Bank of America isn’t alone in these recommendations.

Fidelity has provided portfolio allocation guidance of 2-5% to BTC with up to 7.5% for younger investors.

Soon enough, these allocations will be standard across all wealth management providers…