Crypto Stocks Rally as BofA Endorses Bitcoin for Client Portfolios
Bank of America's recommendation for a crypto allocation of up to 4% signals deepening Wall Street acceptance, fueling gains in digital asset equities.
Shares of cryptocurrency-exposed companies surged in Tuesday trading after Bank of America signaled a significant embrace of digital assets, recommending that its wealth management clients consider allocating a portion of their portfolios to crypto.
The banking giant is now advising clients at Merrill and Bank of America Private Bank to potentially invest 1% to 4% in digital assets, a move that lends substantial institutional weight to the burgeoning asset class. The bank also initiated formal research coverage on several U.S. spot Bitcoin exchange-traded funds (ETFs), including offerings from BlackRock and Fidelity, according to recent reports.
The news triggered a broad rally across the sector. Shares of Coinbase (COIN), the largest U.S. cryptocurrency exchange, climbed 3.3% to $268.31. MicroStrategy (MSTR), a software developer known for its massive Bitcoin holdings, saw its stock jump 6.5% to $182.48.
Bank of America's endorsement marks a pivotal moment for digital assets, reflecting a broader trend of integration into mainstream finance. The guidance provides a new level of validation for investors who have remained on the sidelines, potentially unlocking significant capital inflows. Chris Hyzy, Chief Investment Officer for Bank of America, stressed that the allocation is suitable for investors comfortable with volatility and should be accessed through regulated products.
This development comes as institutional sentiment toward crypto shows renewed strength. U.S. spot Bitcoin ETFs recently reversed a multi-week outflow streak, attracting approximately $180 million in fresh investment as of late November. The shift coincides with growing market expectations for a Federal Reserve rate cut, a macroeconomic factor that typically boosts investor appetite for risk assets like cryptocurrencies.
The move by Bank of America represents a notable evolution from its previously skeptical stance. As recently as 2021, the bank published a critical report titled "Bitcoin's Dirty Little Secrets." However, its position has gradually softened, with a July 2025 report ranking Bitcoin as the year's best-performing currency and another placing it among the most disruptive innovations of the last millennium.
By joining peers like Morgan Stanley and BlackRock in offering crypto exposure, Bank of America is acknowledging persistent client demand and the asset class's staying power. While the bank's recommended allocation remains modest, its entry into the space provides a powerful tailwind for companies whose fortunes are closely tied to the digital asset ecosystem.
Despite the bullish sentiment, the sector is not without headwinds. Regulatory uncertainty continues to loom, and MSCI recently proposed excluding firms with heavy crypto treasury holdings from certain equity indexes, a move that could force selling from passive funds. Nonetheless, for now, the signal from one of Wall Street's most established institutions is clear: digital assets are carving out a permanent, albeit volatile, place in modern investment portfolios.