Morgan Stanley Advises Conservative Crypto Allocations in Investment Portfolios

According to Cointelegraph, the financial services giant Morgan Stanley has issued guidelines for cryptocurrency allocations within multi-asset portfolios, advocating for a conservative approach in its October Global Investment Committee report directed at investment advisors. The report suggests that cryptocurrencies should constitute up to 4% of "Opportunistic Growth" portfolios, which are designed for higher risks and returns. For "Balanced Growth" portfolios, which have a more moderate risk profile, the recommended allocation is up to 2%. However, for portfolios focused on wealth preservation and income, the report advises a 0% allocation.

The report highlights the potential for greater volatility and higher correlations with other asset classes during periods of macroeconomic and market stress, despite the history of disproportionate returns and declining volatility of the emerging asset class. Hunter Horsley, CEO of investment manager Bitwise, described the report as significant, noting that the Global Investment Committee guides 16,000 advisors managing $2 trillion in savings and wealth for clients. This development marks a step towards the widespread acceptance of cryptocurrencies, reflecting the growing institutional adoption among major banks and financial services companies, further legitimizing cryptocurrencies as an asset class.

The Morgan Stanley report also addresses the status of Bitcoin as a "scarce asset, akin to digital gold," emphasizing its growing institutional adoption as a treasury reserve asset and through investment vehicles such as exchange-traded funds. Bitcoin recently reached a new all-time high, surpassing $125,000, amid a government shutdown in the United States and rising asset prices.