Bitcoin entered the center of Wall Street wealth management after Bank of America’s approval for investors to add the digital asset to their portfolios. A crypto analyst discussed the development and highlighted the potential effect of Bitcoin’s adoption by one of the largest banks in the United States.
Bitcoin entered the center of Wall Street wealth management after Bank of America’s approval for investors to add the digital asset to their portfolios. A crypto analyst discussed the development and highlighted the potential effect of Bitcoin’s adoption by one of the largest banks in the United States.
In the meantime, the analyst cited a recommendation by the Bank of America Chief Investment Officer, Chris Hisey. According to Hisey, between 1% and 4% portfolio allocation would be ideal for investors with a strong interest in thematic and comfort with elevated volatility.
Although Hisey described such allocations as modest, the analyst noted that the relatively low percentage cited could apply to massive volumes in actual funds. According to him, the channel created by the bank opens the way for over 15,000 advisers to bring Bitcoin exposure into conversion with their clients.
Putting the development in context, the analyst adopted a mathematical analogy where Bank of America wealth clients collectively have $1 trillion in eligible assets. According to him, a 2.5% average Bitcoin allocation across that base would reflect a $25 billion volume channeled to that sector.
In further review, the analyst envisaged a scenario where half of the projected funds, that is, $12.5 billion, ended up in actual Bitcoin purchases. That would give a demand boost of up to 125,000 Bitcoins at an average price of $100,000. This volume represents approximately three-quarters of the Bitcoin supply in a year.
Considering the growing adoption of Bitcoin by other mainstream institutions, such as Morgan Stanley, Fidelity, and BlackRock, the analyst observes a situation where these major asset managers are claiming small single-digit Bitcoin allocations that would eventually accumulate to massive acquisitions.
According to the analyst, the current system is introducing a new model portfolio rule of thumb that is allowing Bitcoin to move deeper inside the mainstream investment ecosystem.
