Summary Bank of America’s decision to recommend a 1–4% crypto allocation marks a significant shift in U.S. wealth management, opening the door for potentially large, longer-term inflows from investment advisers who collectively oversee trillions in client assets. Vanguard’s reversal on crypto stance highlights growing investor demand and expansion of the crypto distribution channel, but it doesn’t necessarily imply stronger price performance for underlying crypto assets. Ethereum’s Fusaka upgrade boosts both L1 and L2 performance and signals a shift back toward L1 scaling as a way to improve network throughput and strengthen ETH’s long-term value capture. Bank of America Recommends 1%–4% Crypto Allocation for Portfolios Bank of America is rolling out its first formal crypto-allocation guidance, recommending that Merrill, Private Bank, and Merrill Edge clients consider putting 1–4% of their portfolios into digital assets. It’s a notable shift, considering investment advisers weren’t allowed to bring up crypto with clients unless asked, a rule that effectively sidelined more than 15,000 advisers during a period of rising demand. Beginning January 5, 2026, the CIO group will also start covering a handful of spot bitcoin ETFs, including offerings from BlackRock, Fidelity, Bitwise, and Grayscale. Private Bank CIO Chris Hyzy said a small allocation might be appropriate for clients comfortable with volatility, adding that the bank is sticking to regulated products and diversified approaches. With this move, BoA is falling in line with other big firms that have already put numbers around crypto exposure. Morgan Stanley issued a 2–4% recommendation for "opportunistic portfolios" in October, while BlackRock has often argued for a 1–2% bitcoin allocation. Fidelity has long maintained a 2–5% crypto range, with higher bands for younger investors. Key Take Most individual investors still hold no Bitcoin ( BTC-USD ) or crypto at all. A recent study estimates global crypto ownership at around 9.9% of internet users, which basically means the majority of people, close to 90%, have zero exposure. We’re likely to see more banks opening up their wealth-management channels to crypto, and this area is shaping up to be one of the last major hurdles in U.S. digital-asset distribution. These advisers collectively oversee about $30 trillion, so even something as small as a 2% bitcoin allocation through that pipeline could mean roughly $600 billion of potential inflows. Compared with traders on exchanges or brokerage ETF buyers, who tend to trade around short-term swings, wealth-management clients usually take a portfolio-level approach. When they add bitcoin, it’s often a longer-term, more stable position, which makes this type of flow quite different, and arguably more impactful, than typical retail trading. Vanguard Opens the Door to Crypto ETFs and Mutual Funds Vanguard is set to open its brokerage platform to crypto ETFs and mutual funds, a move that stands in sharp contrast to its prior position. Back in early 2024, the firm stood firm on not allowing clients to trade the newly approved spot Bitcoin ETFs and went so far as to remove access to Bitcoin futures products. That made Vanguard an outlier among major asset managers. Vanguard is the world’s second-largest asset manager, managing more than $11 trillion in assets and serving over 50 million investors across retail, retirement, and institutional accounts. This move marks one of the most significant mainstream distribution expansions for crypto products to date. According to the company, it will allow most crypto ETFs and mutual funds that meet SEC requirements, treating them much like other niche sectors such as gold funds. Products tied to memecoins or anything outside the regulatory framework will stay off the platform. Vanguard also made clear that it doesn’t plan to launch its own crypto products anytime soon. Key Take Vanguard’s change in attitude looks largely tied to the steady demand for crypto ETFs from both retail and institutional investors. Even with the recent market pullback, ETF products like BlackRock’s IBIT have generated strong revenue for the issuer, and has effectively become one of BlackRock's most profitable product lines. This marks another milestone for the expansion of crypto product distribution channel, and can greatly help to draw in more TradFi investors. That said, it doesn’t automatically translate into price gains for Bitcoin or other crypto assets that have ETF exposure. As we’ve discussed in prior analysis articles, ETF investors tend to be reactive to shifts in market sentiment. They usually buy when the mood in the crypto market is upbeat, but they’re just as quick to sell once sentiment turns negative. Ethereum’s “Fusaka” Upgrade Goes Live Ethereum’s ( ETH-USD ) latest network upgrade, Fusaka, is now live on mainnet. The update rolls out a batch of changes across both the execution and consensus layers, mainly aimed at helping the chain keep up with the growing amount of data coming in from layer-2 networks. The centerpiece of the upgrade is PeerDAS (EIP-7594), a new data-availability system that lets nodes verify only small slices of large blob datasets instead of downloading every byte. By sampling segments rather than pulling entire blobs, validators face far lower bandwidth and storage requirements, making data posting cheaper for rollups and allowing them to scale more comfortably. Fusaka also includes a major increase to Ethereum’s block gas limit, raising the default gas limit from 36 million to 60 million units. This expansion gives the base layer far more room to process transactions and smart-contract activity, easing congestion and improving overall throughput. Key Take This upgrade benefits both Layer-2 scaling networks and Ethereum’s base layer itself. It reflects a gradual shift in Ethereum’s development this year, where the focus is no longer solely on L2-centric improvements but also on strengthening L1 scalability. ETH as an asset has struggled with an unclear value-accrual model in recent years. Under a Layer-2–centric roadmap, much of the transaction activity has been offloaded to Layer 2 networks, leaving the Ethereum base layer with limited fee capture. As a result, ETH has moved from being a deflationary asset back into inflationary territory, due to the base layer’s insufficient fee revenue capture. Fusaka marks a strategic shift in Ethereum’s roadmap toward scaling both L1 and L2, reinforcing the push to make the network a meaningful value generator for ETH holders, especially as increased L1 throughput directs far more economic value to the token than L2 activity. Weekly Market Chart: Crypto Allocation in Portfolio Global banks have increasingly warmed to cryptocurrency exposure in client portfolios, particularly via regulated vehicles like Bitcoin ETFs, as institutional adoption grows in 2025. Recommendations vary by bank, risk tolerance, and client type, but most suggest modest allocations (typically 1-5%) to balance potential upside with volatility. These giant traditional finance institutions often frame bitcoin exposure as a modern alternative asset class akin to "digital gold" that offers potential diversification benefits, inflation hedging, and exposure to technological innovation. Disclaimer: The information provided herein does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and should not be treated as such. All content set out below is for informational purposes only. Original Post
