Bank of America has taken a significant step in the cryptocurrency landscape by advising its wealth management clients to hold up to 4% of their portfolios in Bitcoin and other digital assets. This guidance signals a crucial shift towards mainstream acceptance of cryptocurrencies, particularly as Bitcoin’s price recently surged above $92,000.
As part of this initiative, Bank of America plans to begin coverage of four spot Bitcoin exchange-traded funds (ETFs) starting in January. These funds—inclusive of offerings from Bitwise, Fidelity, Grayscale, and BlackRock—allow investors to gain direct exposure to Bitcoin through U.S.-listed ETFs that received approval last year. Chris Hyzy, chief investment officer at Bank of America Private Bank, remarked, “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.” He advised that more conservative investors might consider the lower range of this recommendation, while those willing to take on more risk could lean towards the higher end.
The timing of this advice coincides with Bitcoin’s recent price increase, with the cryptocurrency reaching approximately $92,265 in early trading hours. Analysts believe that if this bullish trend continues, Bitcoin could potentially rise to around $98,139, and even target $103,518 in a highly bullish market. However, there is also caution that a reversal below the $85,000 support level is possible. Despite the recent rally, Bitcoin’s price remains down over 6% for the year, indicating a volatile market.
Bank of America’s move is reflective of a broader trend among major U.S. financial institutions increasingly engaging with cryptocurrencies. Recently, JPMorgan launched a blockchain-based deposit token aimed at institutional clients and has filed a structured product linked to BlackRock’s Bitcoin ETF. Additionally, the bank is set to introduce a private tokenized money-market fund backed by Ethereum, merging traditional cash-management stability with blockchain features like faster settlement. Similarly, Citi is reportedly in the process of developing a crypto custody platform, with plans for a 2026 rollout.
The significance of Bank of America’s recommendation lies in its potential to bridge the gap between traditional investment strategies and the burgeoning world of digital assets. Despite Bitcoin’s rise and liquidity, it has historically been excluded from the conversation surrounding conventional portfolio construction due to regulatory uncertainties and price volatility. By integrating Bitcoin into its recommended portfolios, Bank of America brings cryptocurrencies into the mainstream investment discussion.
Furthermore, the recent shift in Bitcoin and Ethereum ETFs has shown renewed institutional interest. After weeks of net outflows, U.S.-listed Bitcoin ETFs managed to attract approximately $355 million in net inflows just before the year’s end, while Ethereum ETFs saw close to $68 million in inflows, marking a break in a drought of withdrawals. This follows a challenging period where both Bitcoin and Ethereum saw combined outflows exceeding $1.1 billion, attributed to institutional investors’ risk-reduction strategies during the holidays.
In summary, Bank of America’s latest recommendations not only highlight the bank’s commitment to adapting to the evolving financial landscape but also pave the way for broader acceptance and integration of cryptocurrencies within traditional investment frameworks.
