The financial services leader Morgan Stanley has put forth guidelines for cryptocurrency allocations within multi-asset portfolios, advocating for a “conservative” strategy in their October Global Investment Committee (GIC) report directed at investment advisors.
Morgan Stanley analysts suggest a maximum 4% allocation to cryptocurrencies in “Opportunistic Growth” portfolios, which are designed for higher risks paired with higher returns.
They also advise a maximum of 2% allocation for “Balanced Growth” portfolios that embody a more moderate risk profile. Nevertheless, the report recommends a 0% allocation for portfolios focused on wealth preservation and income. The authors noted:
“Although this emerging asset class has shown significant total returns and decreasing volatility recently, cryptocurrency may face heightened volatility and stronger correlations with other asset classes during times of macroeconomic and market stress.”
Hunter Horsley, the CEO of investment manager Bitwise, described the report as “huge” news. “GIC advises 16,000 advisors managing $2 trillion in savings and wealth for clients. We’re entering a mainstream era,” he stated.
This report from Morgan Stanley underscores the increasing institutional adoption and acceptance of cryptocurrencies, especially among major banks and financial service firms, which brings more capital into the crypto markets and reinforces crypto’s standing as a legitimate asset class.
Related: E*Trade to add Bitcoin, Ether, Solana in Morgan Stanley’s crypto expansion
Morgan Stanley report labels Bitcoin as digital gold as BTC hits new record
Bitcoin (BTC), perceived by Morgan Stanley analysts as a “scarce asset, similar to digital gold,” continues to see institutional adoption both as a treasury reserve asset and through investment options like exchange-traded funds (ETFs).
On Saturday, Bitcoin’s price reached a new all-time high of over $125,000, while BTC exchange balances—representing the number of coins held by exchanges—plummeted to a six-year low, according to data from Glassnode.
Bitcoin’s rally to this new all-time high occurred against the backdrop of a government shutdown in the U.S. and rising prices for safe-haven, store-of-value, and risk-on assets.
Investment analysts at The Kobeissi Letter remarked on Sunday, “There is a broad influx into assets occurring presently. As inflation rises and the labor market deteriorates.”
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