More well-known financial institutions are opening the door for Bitcoin exposure, indicating a growing interest among institutions in regulated digital asset products.
According to a statement shared with Yahoo Finance on Tuesday, Bank of America, the second-largest bank in the U.S., reportedly recommended a 1%–4% cryptocurrency allocation to its wealth management clients through the Merrill, Bank of America Private Bank, and Merrill Edge platforms.
"For investors with a strong interest in thematic innovation and the ability to withstand higher volatility, a moderate allocation of 1% to 4% in digital assets may be appropriate," said Chris Hyzy, Chief Investment Officer of Bank of America Private Bank, in a statement shared with Yahoo.
Starting January 5, the bank will enable its clients to access four new Bitcoin (BTC) exchange-traded funds (ETFs), including the Bitwise Bitcoin ETF (BITB), Fidelity's Wise Origin Bitcoin Fund (FBTC), Grayscale's Bitcoin Trust (BTC), and BlackRock's iShares Bitcoin Trust (IBIT).
This development will allow the bank's wealthiest clients to access Bitcoin ETFs, which were previously available only upon client request. The bank's more than 15,000 wealth advisors were previously unable to recommend any cryptocurrency investment products.
"Our guidance emphasizes regulated tools, thoughtful allocations, and a clear understanding of opportunities and risks," the bank's Chief Investment Officer added.
The bank's Bitcoin allocation recommendation indicates a broader institutional interest in regulated cryptocurrency investment products. This comes a day after the world's second-largest asset management company, Vanguard, enabled cryptocurrency ETF trading for its clients, reversing its previous stance on digital asset ETFs.
Cointelegraph has reached out to Bank of America for more details regarding its cryptocurrency allocation recommendations.
According to Forbes, Bank of America is the second-largest bank in the U.S., with approximately $2.67 trillion in total assets and over 3,600 branches.
Cointelegraph reported in December 2024 that BlackRock, the world's largest asset management company, was the first major institution to recommend a maximum 2% Bitcoin allocation to its clients.
At that time, BlackRock stated in a report that approximately 1%–2% is a "reasonable range for Bitcoin exposure," which constitutes "the same overall portfolio risk share" as a typical allocation to the "seven tech giants."
The "seven giants" refer to Amazon, Apple, Microsoft, Alphabet, Tesla, Meta, and Nvidia.
In June, asset management company Fidelity also recommended a 2% to 5% Bitcoin allocation, a proportion small enough to minimize the risk of a Bitcoin crash but large enough to enjoy any upside potential of BTC as an inflation hedge.
Earlier in October, Morgan Stanley also suggested that investors and financial advisors allocate 2% to 4% to cryptocurrency portfolios, further indicating that large financial institutions are moving towards a common strategy of moderate, risk-managed exposure to digital assets.
Related: CME launches Bitcoin (BTC) volatility index as institutional cryptocurrency trading matures
Original: “Bank of America Supports 1%–4% Cryptocurrency Allocation, Greenlights Bitcoin (BTC) ETFs”
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