Morgan Stanley Advises Up to 4% Crypto Allocation for High-Risk and Growth-Oriented Portfolios

• Morgan Stanley advises up to 4% crypto in high-risk portfolios and 0% for low-risk ones.
• Bitcoin hits record high as Morgan Stanley highlights rising demand and falling supply on exchanges.
• E-Trade to offer crypto trading by 2026 as Morgan Stanley expands access to digital assets.

Morgan Stanley has introduced new guidance for including cryptocurrencies in investment portfolios. The bank’s Global Investment Committee (GIC) advised financial advisors to limit crypto exposure. The recommendations vary by portfolio type, ranging from 0% to 4%.

High-risk portfolios may include up to 4% in crypto, according to the report. Balanced portfolios are advised to cap crypto exposure at 2%. However, wealth preservation and income-focused portfolios should hold no crypto at all.

The report stresses caution, noting that while crypto has delivered strong returns, it still faces periods of high volatility. The GIC did not include digital assets in its official allocation models. Still, it acknowledged growing interest from clients and advisors.

Institutional Acceptance Increases

The report shows the changing nature of Bitcoin as a digital asset. Analysts likened it to gold, a rare commodity with a promising long-term outlook. They included it under the broader category of real assets.

Recently, Bitcoin hit a record of more than $125,000. This rush came amidst increased market stress, such as the U.S government shutdown and economic anxiety.

The supply in exchanges has decreased to its lowest point in six years. This tendency is directed at increasing buying demand and insufficient supply, which raises the price even further.

The report reflects the growing interest from institutional investors. More large firms are allocating capital to cryptocurrencies. This move strengthens the asset’s legitimacy within traditional finance.

Portfolio Rebalancing Stressed

Morgan Stanley urged investors to rebalance portfolios regularly. Crypto’s volatility can cause allocations to grow beyond intended limits. The GIC advised quarterly or annual rebalancing.

Even with limited exposure, crypto may impact overall portfolio performance. The report is designed to enable the advisors to handle risk as they react to the interests of the clients.

Though the guidance is cautious, it signals broader acceptance. Many investors, especially younger ones, continue to push for digital asset exposure. Earlier this year, Morgan Stanley deepened its crypto focus with $188M in Bitcoin ETFs, bridging traditional finance and digital assets securely.

E-Trade Integration Underway

Morgan Stanley also plans to expand its crypto offerings through E-Trade. Starting in early 2026, clients will gain direct crypto access.

The bank will partner with crypto infrastructure firm Zerohash. This move includes services such as liquidity, custody, and settlement.

E-Trade’s crypto trading feature could unlock over $1.3 trillion in volume. This would mark a major step into digital assets by a leading U.S. bank.

The rollout represents one of the most significant crypto expansions in traditional banking. It reflects shifting attitudes and increased demand for regulated crypto access.