Bank of America Embraces Cryptocurrency: High-Net-Worth Clients Can Allocate Up to 4% of Assets to Crypto Assets

Global Banking Giant Bank of America Officially Advises Wealth Management Clients to Allocate 1%-4% of Portfolios to Digital Assets

Bank of America, a global banking giant, has formally issued guidance to its wealth management clients, recommending that 1% to 4% of their portfolios be allocated to digital assets. This advice covers clients of Merrill Lynch, Bank of America Private Bank, and Merrill Edge platforms, marking a substantive new phase in traditional financial giants’ acceptance of cryptocurrencies. Starting January 5, the bank’s investment strategists will begin coverage of four spot Bitcoin ETFs, including those from Bitwise, Fidelity, Grayscale, and BlackRock. This move reflects strong client demand and aligns with the steps taken by other Wall Street institutions, together forming a critical foundation for institutional capital entry, even as the crypto market is currently experiencing a significant pullback.

Officially Incorporated into Asset Allocation Framework: 1%-4% Becomes the New Institutional “Consensus”

This week, Bank of America issued a milestone investment guideline to its vast wealth management client base. The bank’s Chief Investment Office recommends that investors with a strong interest in thematic innovation and the ability to withstand higher volatility may find it appropriate to allocate 1% to 4% of their portfolios to digital assets. Chris Hyzy, Chief Investment Officer of Bank of America Private Bank, emphasized in a statement: “Our guidance emphasizes regulated instruments, prudent allocation, and a clear understanding of opportunities and risks.”

This recommendation is far from theoretical—it comes with a specific, actionable product list. Beginning January 5, the bank’s investment strategists will formally cover and analyze four spot Bitcoin ETFs: Bitwise Bitcoin ETF (BITB), Fidelity Wise Origin Bitcoin Fund (FBTC), Grayscale Bitcoin Mini Trust (BTC), and BlackRock’s iShares Bitcoin Trust (IBIT). This move fundamentally changes the previous model—previously, clients could only access these products upon specific request, and more than 15,000 of the bank’s wealth advisors were not allowed to proactively recommend them. Nancy Fahmy, Head of Investment Solutions at Bank of America, stated bluntly: “This update reflects growing client demand for access to digital assets.”

The 1% to 4% allocation range is given flexible risk adaptation significance. Hyzy added: “The lower end of the range may be more suitable for conservative investors, while the higher end may suit those with a greater tolerance for overall portfolio risk.” This quantitative recommendation provides a clear conversation framework for advisors and clients, moving crypto assets from a vague “speculative option” into the classic investment portfolio risk management system—a shift with both symbolic significance and real capital-attracting power.

Overview of Mainstream Wall Street Institutions’ Crypto Allocation Recommendations

Bank of America: Recommends allocation of 1%-4% (January 2025)

Morgan Stanley: Recommends allocation of 2%-4% (October 2024)

Fidelity Investments: Recommends allocation of 2%-5% (7.5% for investors aged 30 and under, March 2024)

BlackRock: Recommends allocation of 1%-2% (Early 2025)

Covered Products: Mainly through regulated instruments such as spot Bitcoin ETFs

Wall Street’s Collective Shift: From Cautious Observation to Proactive Embrace

Bank of America’s move is not an isolated event but the latest wave in Wall Street’s “crypto-ization” over the past year. This wave is sweeping the traditional financial system from multiple dimensions. In terms of product accessibility, institutions like Morgan Stanley, Charles Schwab, Fidelity Investments, and JPMorgan Chase have already allowed all clients to invest in specific crypto ETFs. Fintech bank SoFi began offering direct crypto trading services to retail clients a month ago, and several other banks—including Charles Schwab, Morgan Stanley, and PNC Bank—are expected to follow suit.

At the asset allocation theory level, top institutions’ views are rapidly converging. As early as October 2024, Morgan Stanley’s Global Investment Committee provided allocation parameters to investors and advisors, recommending that 2% to 4% of portfolios be allocated to cryptocurrencies, describing them as “a speculative but increasingly popular asset class.” In early 2025, asset management giant BlackRock proposed allocating 1% to 2% to Bitcoin. Even earlier, in March 2024, Fidelity Investments suggested an aggressive allocation of up to 7.5% for investors aged 30 and under. Even Vanguard, long known for its conservative approach, was reported this Monday to begin allowing certain crypto ETFs and mutual funds on its platform.

Behind this series of moves is a clear shift in policy direction. The Trump administration this year pushed for a dramatic reversal in US crypto policy, including removing multiple barriers set by Biden-era regulators that restricted banks from participating in crypto activities, and providing the industry with a clearer regulatory framework. Although many US banks are still waiting for Congress to pass key crypto legislation to establish a comprehensive federal regulatory framework for the crypto market before offering direct trading, custody, and other services, the current policy warmth is already enough for major institutions to begin actively positioning themselves.

Policy Tailwinds and Market Headwinds: The “Golden Window” for Institutional Entry?

A curious and thought-provoking market phenomenon is unfolding: on the one hand, traditional financial institutions are embracing crypto with unprecedented enthusiasm and building out infrastructure; on the other, the crypto market itself is mired in a downturn and sharp correction. This divergence creates a complex picture. Since reaching a historic high of over $126,000 in early October, Bitcoin’s price has fallen by about one-third, hovering around $85,000 as of Monday afternoon. Year-to-date, Bitcoin is down about 10%, while the S&P 500 Index is up more than 15% over the same period.

What does this divergence mean for investors? In the short term, market corrections undoubtedly dent confidence and cause significant paper losses. But from the perspective of long-term institutional capital allocation, this period of market calm may be a “golden window” for building positions. The recommendations from institutions like Bank of America are not encouraging clients to chase the market during a frenzy, but rather to make prudent, long-term allocations after the market has undergone sufficient adjustment and some risk has been released. This reflects a more mature and rational investment approach: treating crypto assets as a long-term allocation option to hedge fiat currency depreciation and participate in technological innovation, rather than as a short-term speculation tool.

JPMorgan’s approach provides another example. Although its global and US wealth management divisions have not yet provided official crypto guidance to its 5,900 advisors, its plans to explore other areas of the crypto world have accelerated this year. Since the fall, it has allowed Chase credit card clients to top up on major US CEXs. This shows that major banks’ strategies are comprehensive, covering payments, custody, asset allocation, and more, all awaiting a more perfect regulatory landing.

In-Depth Analysis: Why 1%-4%? The Art of Asset Allocation

For ordinary investors, the 1% to 4% figure suggested by Bank of America is not arbitrary—it is rooted in modern portfolio theory. An allocation that is too small (such as below 0.5%) has almost no impact on the overall portfolio’s returns or risk characteristics, thus losing its meaning. Conversely, an allocation that is too large (such as above 5%) may expose the entire portfolio to risk levels beyond the investor’s tolerance, especially given crypto’s high volatility.

1% to 4% is a delicate balance. For example, in a $1 million portfolio, this would mean allocating $10,000 to $40,000 to crypto assets. Even in the worst-case scenario where these funds are entirely lost, the overall wealth impact is controllable (a maximum drawdown of 4%). However, if crypto assets, as their supporters predict, achieve exponential growth over the next decade, this “small portion” could become the “rocket engine” driving the entire portfolio’s returns. This “limited downside risk, massive upside potential” asymmetry is the core logic behind institutional recommendations for small allocations. It is no longer gambling, but a risk-calibrated, disciplined long-term investment.

When Bank of America’s wealth advisors begin to seriously discuss that 1% to 4% allocation with clients, the historical chapter of crypto assets has truly moved beyond its wild early days. This is not just an update in investment advice, but a tacit endorsement from the mainstream financial system of crypto’s value as a store of value and asset class. The sharp contrast between the current market chill and institutional enthusiasm precisely reveals two different time dimensions: market traders focus on short-term volatility and gains or losses, while institutions are laying out the financial landscape for five or ten years ahead. For ordinary investors, the important question may no longer be whether “Bitcoin will rise or fall tomorrow,” but rather: now that Wall Street has built the bridge to digital assets with its own hands, is your portfolio ready?