Morgan Stanley Suggests Crypto Allocation for Wealth Management Clients

Morgan Stanley Gives Nod to Crypto in Portfolios

Morgan Stanley's Global Investment Committee (GIC) has released guidance suggesting that financial advisors consider allocating a small portion of client portfolios to cryptocurrency. The recommendation ranges from 2% to 4%, depending on the client's risk tolerance.

Key Takeaways:

• Modest Exposure: The GIC emphasizes that cryptocurrency exposure should be modest and conservative.
• Advisor Support: While crypto won't be explicitly included in model portfolios, the guidance aims to equip advisors to handle client interest.
• Rebalancing is Key: Regular portfolio rebalancing (quarterly or annually) is crucial to manage risk.
• "Digital Gold": Morgan Stanley compares Bitcoin to "digital gold", placing it in the real assets category.

Bitcoin's Surge and Tightening Supply

The recommendation arrives as Bitcoin has surged, recently hitting a record high of $125,000. Centralized exchanges are reporting the lowest Bitcoin reserves in six years, indicating a supply crunch as demand increases.

Broader Crypto Plans for Morgan Stanley

In addition to this guidance, Morgan Stanley plans to roll out crypto trading for E*Trade clients in early 2026, potentially opening up access to significant trading volume. They are partnering with Zerohash for liquidity, custody, and settlement.

Wall Street's Cautious Embrace

This move reflects a growing, albeit cautious, acceptance of crypto by major financial institutions. While acknowledging the risks of volatility and liquidity, Morgan Stanley is recognizing the increasing demand and appeal of digital assets.