Bank of America Backs 4% Crypto Allocation as Retail Takes Losses

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Oh, look! Bank of America (BofA) has decided to let its wealthy clients throw a measly 1%-4% into crypto. Because why not, right? A landmark shift in how Wall Street is finally getting around to digital assets… after everyone else already made their move.

Of course, this fresh endorsement comes at the most opportune time for retail investors, who are currently holding the bag as they see their Bitcoin ETFs sink faster than a stone in a pond.

BofA Opens the Door to Mainstream Crypto Exposure

Bank of America is starting CIO coverage on four Bitcoin ETFs-BITB, FBTC, Grayscale Mini Trust, and IBIT-on January 5, 2026. Yeah, the future is now… or, you know, in 2026.

Thanks to this move, over 15,000 advisers at Merrill, the Private Bank, and Merrill Edge will now be able to recommend regulated crypto products. Wow, a first time proactive move-this is cutting-edge stuff, people.

Chris Hyzy, the CIO of Bank of America Private Bank, said, “If you’ve got an unhealthy obsession with digital innovation and a high tolerance for volatility, sure, go ahead and throw 1% to 4% in crypto.”

Because, you know, who doesn’t want to jump in while everything is crashing down? He also added that clients should have a “clear understanding of both opportunities and risks.” Like that’s gonna help.

Previously, crypto ETFs were only available to clients by request. Which, you know, probably left a lot of retail investors scurrying around trying to find crypto exposure anywhere else. Not ideal.

But hey, Nancy Fahmy, head of BofA’s investment solutions group, says this update is because of “growing client demand for access to digital assets.” So… there’s that.

Wall Street Consensus Is Quickly Forming

And it’s not just BofA jumping on the bandwagon, folks. Here’s a little peek at the rest of Wall Street’s thoughts on crypto:

  • Morgan Stanley recommends 2%-4% crypto allocations.
  • BlackRock thinks 1%-2% is more than enough.
  • Fidelity is pushing for 2%-5%, and maybe up to 7.5% for younger investors-because why not take a bigger gamble when you’re younger?
  • Vanguard is now onboard with crypto ETFs. Guess who’s having an identity crisis?
  • And, surprise surprise, SoFi, Schwab, JPMorgan, and others are now offering some sort of ETF access or crypto-linked services. Where were these guys a few years ago?

This is all happening thanks to a sweeping policy reversal during the Trump administration, which basically removed the restrictions Biden had put in place on banks and crypto. So much for regulation, huh?

Now everyone’s just sitting around, waiting for Congress to clarify the whole custody, trading, and platform crypto thing. Great timing!

Retail Suffers the Most as Markets Turn Red

Here’s where things get juicy: The timing of this institutional adoption is chef’s kiss perfect. Bitcoin has dropped almost 33% from its peak of $126,000. Meanwhile, the S&P 500 is up 15%. Yeah, you read that right.

Retail investors now hold about 75% of the spot Bitcoin ETF assets, meaning they’re the ones getting steamrolled by the market volatility. Fun times.

On the flip side, institutional ownership has crept up from 20% to 28%. So, it’s not just retail feeling the heat. But hey, at least the big players are cozying up to Bitcoin and Ethereum while retail throws in the towel.

New ETF Launches Deep in the Red

But wait, it gets worse! The recent flood of altcoin-heavy ETFs? Oh, they’re in the red, too:

  • All 11 new products have lost money, thanks to a $600 billion wipeout in Bitcoin’s market cap since October.
  • A small-cap index of the bottom 50 crypto assets is now at its lowest since November 2020. Nice!
  • Performance: SSK -15%, BSOL -30%, DOJE -40%. Who’s betting on these?

And then, there’s the LINK ETF… who knows what will happen with that one? Probably another disaster waiting to happen.

According to Bloomberg, “It seems like a mix of retail traders getting burned and issuers just badly timing their entry.” Brilliant, really. Because when you package a volatile asset in a nice, neat ETF wrapper, it’s bound to make everyone feel secure, right?

BofA’s move signals that the crypto institutional era is finally here-congratulations, you made it, folks. Now, millions of clients can dive into regulated crypto products. Yippee!

But with retail investors still licking their wounds and ownership quickly shifting to ETF holders, you can bet market volatility will remain a fun ride. All we need now is a little help from Washington to decide just how far banks can take crypto. That’s the next big thing to look forward to.

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2025-12-02 16:23