The financial services powerhouse Morgan Stanley has released guidelines for cryptocurrency allocations in multi-asset portfolios, advocating for a “conservative” strategy in a report from the Global Investment Committee (GIC) directed at investment advisors.
Analysts at Morgan Stanley suggest a maximum allocation of 4% for cryptocurrencies in “Opportunistic Growth” portfolios, which are designed for higher risks and potential returns.
For “Balanced Growth” portfolios that have a more moderate risk profile, a maximum allocation of 2% is recommended. In contrast, the report advises a 0% allocation for portfolios focused on wealth preservation and income. The authors noted:
“While the emerging asset class has experienced outsized total returns and declining volatility over recent years, cryptocurrency could experience more elevated volatility and higher correlations with other asset classes in periods of macro and market stress.”
Hunter Horsley, the CEO of investment management firm Bitwise, described the report as “huge” news. “GIC guides 16,000 advisors managing $2 trillion in savings and wealth for clients. We’re entering the mainstream era,” he noted.
Morgan Stanley’s report is indicative of the increasing institutional adoption and acceptance of crypto, particularly among major banks and financial service providers, which draws in more capital into the crypto markets and bolsters crypto’s legitimacy as an asset class.
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Morgan Stanley report labels Bitcoin as digital gold as BTC reaches new all-time high
Bitcoin (BTC), which Morgan Stanley analysts regard as a “scarce asset, akin to digital gold,” sees growing institutional adoption as a treasury reserve asset and through investment interfaces like exchange-traded funds (ETFs).
The price of Bitcoin achieved a new all-time high of over $125,000 on Saturday, as BTC exchange balances, representing the number of coins available for purchase on exchanges, fell to a six-year low, per data from Glassnode.
Bitcoin surged to record highs amidst a government shutdown in the United States and an increase in the prices of safe-haven and risk-on assets.
“There is a widespread rush into assets occurring right now. As inflation rebounds and the labor market weakens,” stated investment analysts at The Kobeissi Letter on Sunday.
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