Morning Minute is a daily newsletter written by Tyler Warner. The analyzes and opinions expressed are their own and do not necessarily reflect those of Decrypt. Subscribe to the morning minute in substack.
GM!
Today’s top news:
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Top Crypto Firms Rise 7-10% as Vanguard Unveils Crypto Access; BTC at $92,900
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Bank of America Recommends Up to 4% Crypto Allocation for Wealth Clients
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Ethereum’s Fusaka Upgrade to Debut Today
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Kalshi raises valuation to $11 billion; Co-founder Luana becomes the youngest billionaire
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Pudgy Penguins announce partnership with NHL for Winter Classic
Yesterday it was Vanguardia. Today it is Bank of America.
More and more TradFi giants are changing the course of cryptocurrencies.
Bank of America’s wealth division has added cryptocurrencies 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 in the future (along with new presentation materials).
Bank of America backs allocating up to 4% of wealth management portfolios to cryptocurrencies: report
The recommendation applies to both high net worth and high net worth clients.
This change came just one day after Vanguard expanded access to the spot. bitcoin, Ethereumand XRP ETF after several years of resistance.
The market liked the news, with Bitcoin rising 2% to around $93,000 and other major cryptocurrencies like ETH and SOL jumping between 9-10%.
“For investors with a strong interest in thematic innovation and who are comfortable with high volatility, a modest allocation of 1% to 4% in digital assets could be appropriate.” – Chris Hyzy, Chief Investment Officer, Bank of America Private Bank
BofA’s decision is just the latest in a series of placing cryptocurrencies alongside all other major investment assets for wealth management clients.
For many clients, allocations are determined by an advisor’s guidance. No individual research or selection.
Therefore, inclusion in these models can greatly influence adoption.
And the impact of recommendations like this is twofold:
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Initial portfolio rebalancing (larger one-time flows)
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continuous purchases as funds are directed to the market (the infinite trick)
As a reminder, Bank of America is not alone in these recommendations.
Fidelity has provided portfolio allocation guidance of 2-5% for BTC and up to 7.5% for younger investors.
Very soon, these allocations will be standard across all wealth management providers…