Morgan Stanley Opens Door to Crypto in Investment Portfolios

The bank’s Global Investment Committee advised up to 4% exposure for high-risk portfolios and 2% for moderate ones, which suggests that there is growing institutional confidence in digital assets. The move was praised by Bitwise CEO Hunter Horsley as “huge,” and comes as Bitcoin hit a new all-time high above $125,000. 

Morgan Stanley Embraces Crypto Exposure

Morgan Stanley took a major step toward legitimizing cryptocurrency as an investable asset class after issuing formal guidelines for crypto allocations in multi-asset portfolios. In its October Global Investment Committee (GIC) report, the financial services giant advised a “conservative” approach but nonetheless included crypto exposure in select portfolio types, which is a huge shift in institutional sentiment.

According to the report, Morgan Stanley analysts recommended up to a 4% crypto allocation for “Opportunistic Growth” portfolios, which are designed for investors looking for higher returns and willing to accept more risk. For “Balanced Growth” portfolios, the report suggested a smaller 2% allocation for those with a more moderate risk appetite. 

(Source: X)

However, for portfolios centered on wealth preservation and income generation, the firm advised a 0% allocation, due to the potential for elevated volatility during periods of market or macroeconomic stress.

The GIC report acknowledged that, while cryptocurrencies delivered outsized returns over the past few years and seen a trend toward declining volatility, they still pose unique risks compared to traditional assets. Nonetheless, the fact that Morgan Stanley’s guidance now actually includes digital assets at all is a turning point for mainstream adoption. 

Bitwise CEO Hunter Horsley called the move “huge,” especially as the GIC’s recommendations reach around 16,000 advisors managing $2 trillion in client wealth. “We’re entering the mainstream era,” Horsley wrote, thanks to the growing role of crypto in professional portfolio management.

The timing of Morgan Stanley’s report coincides with Bitcoin reaching a new all-time high of over $125,000. The bank’s analysts referred to Bitcoin as “digital gold,” due to its perceived scarcity and growing role in institutional treasuries and exchange-traded funds. 

BTC’s price action over the past week (Source: CoinMarketCap)

Data from Glassnode shows Bitcoin exchange balances fell to a six-year low, which suggests strong accumulation by investors. Analysts at The Kobeissi Letter added that a broader shift toward assets like Bitcoin and gold is underway as inflation rebounds and economic uncertainty deepens. This could mean that there is a growing appetite for scarce, non-sovereign assets in times of financial stress.