Morgan Stanley recommends as much as 4% portfolio Bitcoin allocation

Morgan Stanley’s Global Investment Council has officially recommended that clients allocate 2% to 4% of their portfolios to Bitcoin and cryptocurrencies.

A new report released on October 1 provides an overview of cryptocurrencies (primarily Bitcoin) based on investor risk profiles. The report states that opportunistic growth portfolios targeting higher risk and higher return strategies should include up to 4% in cryptocurrencies, while balanced growth portfolios are capped at 2%.

The committee that wrote the report described Bitcoin as a scarce asset on par with digital gold, suggesting it now plays a legitimate role in diversified investment strategies.

“We place emerging asset classes within real assets and focus here on Bitcoin, which we view as an asset similar to digital gold,” the report reads.

While Morgan Stanley acknowledged the asset class’s historical volatility and potential for high correlations with the broader market during times of stress, it also noted that cryptocurrencies have experienced improved total returns and structural maturity in recent years.

Morgan Stanley: Buy cryptocurrencies “every quarter”

Morgan Stanley said clients should regularly rebalance their multi-asset portfolios to include cryptocurrencies – ideally every quarter or at least once a year.

“This rebalancing will reduce the potential for bloated positions, which could mean portfolio-level volatility and crypto risk contributions during periods of macro and market stress,” the report reads.

The report recommends gaining exposure through exchange-traded products to manage volatility and prevent portfolio distortion during strong uptrends. The approach suggests integrating cryptocurrencies into a measured but open stance within a traditional investment framework.

The announcement coincides with Bitcoin reaching a new all-time high of around $126,200 today. The move extended a nine-day rally and was fueled by live ETF inflows and a weakening dollar amid government concerns.

The latest guidance follows Morgan Stanley’s decision in September to expand access to digital assets through its E* trading platform, enabling trading of Bitcoin and other cryptocurrencies through a zero-hash partnership.