Morgan Stanley’s Global Investment Committee has officially recommended that clients allocate between 2% and 4% of their investment portfolios to bitcoin and other cryptocurrencies.

The recent report, published on October 1, delineates recommended crypto allocations based on varying investor risk profiles. Opportunistic growth portfolios, which target higher-risk and higher-return strategies, should incorporate up to 4% in cryptocurrencies, while balanced growth portfolios are advised to limit such allocations to 2%, according to the report.

The committee characterized bitcoin as a scarce asset, likening it to digital gold, and posited that it now holds a legitimate place within diversified investment strategies.

“We position this emerging asset class within the category of real assets and primarily focus our analysis on bitcoin, which we regard as a scarce asset comparable to digital gold,” the report stated.

While acknowledging the historical volatility of this asset class and its potential for high correlation with broader markets during periods of stress, Morgan Stanley also pointed out that total returns and structural maturity within the crypto space have shown significant improvement in recent years.

Morgan Stanley: Advocating Regular Crypto Investments

Morgan Stanley emphasized that clients should regularly rebalance their multi-asset portfolios to include cryptocurrency, ideally on a quarterly basis or at minimum, annually.

“Such rebalancing will mitigate the risks associated with swelling positions, which could lead to elevated portfolio-level volatility and heightened cryptocurrency risk during periods of macroeconomic and market stress,” the report indicated.

The report encourages gaining exposure through exchange-traded products as a means to manage volatility and prevent portfolio distortion during strong upward trends. This approach reflects a measured yet open perspective on the integration of cryptocurrency within traditional investment frameworks.

This announcement coincided with bitcoin achieving a new all-time high of approximately $126,200, marking an extension of a nine-day rally fueled by inflows from spot ETFs and a weakening U.S. dollar amidst renewed concerns of a government shutdown.

Morgan Stanley’s recent guidance follows its decision in September to enhance digital asset accessibility through its E*Trade platform, facilitating trading in bitcoin and other cryptocurrencies via a partnership with Zerohash.

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