Institutions have made a fortune with Bitcoin! Wall Street is doubling down: will trillions in funds allocate 2%–4% to Crypto Assets?

In 2024, the U.S. Securities and Exchange Commission (SEC) approved the Bitcoin Spot ETF, which is seen as a watershed moment in the history of Crypto Assets. In less than two years, this decision has not only completely changed the market landscape but also brought astonishing returns to Wall Street's financial giants. Now, with the enormous success of the ETF being validated, a much larger migration of capital seems to be brewing. Top investment banks, led by Morgan Stanley, are quietly opening a door to the crypto world for the trillions of dollars in assets they manage.

The Birth of the Printing Press

To understand the shift in Wall Street's attitude, one must first observe the wealth effect created by the Bitcoin Spot ETF. Among them, the iShares Bitcoin Trust (IBIT) launched by asset management giant BlackRock is undoubtedly the brightest star of the event.

Data shows that since its launch in January 2024, IBIT's Assets Under Management (AUM) has approached the 100 billion USD mark. Even more astonishing, it has become BlackRock's most profitable ETF product, with management fee revenues exceeding 244 million USD annually. This achievement even surpasses traditional star funds that have been operating for 25 years and manage assets several times its size, such as IVV, which tracks the S&P 500 index.

The success of IBIT is not only reflected in its profitability. Its speed of attracting funds has also set a historical record. For example, in the first week of October 2025, the total net inflow of all Bitcoin Spot ETFs reached 3.2 billion USD in a single week, with IBIT accounting for 1.78 billion USD. On October 6th, the ETF market welcomed a net inflow of 1.19 billion USD in a single day, marking the first "billion-dollar day" since July. This astonishing ability to attract capital has directly pushed the price of Bitcoin above 125,000 USD, setting a new historical high, and has proven to the entire financial community that there is a real and immense demand for compliant and convenient Bitcoin investment channels.

Consensus on Wall Street

BlackRock's success is like a giant stone thrown into a calm lake, creating ripples throughout Wall Street. Investment banking giant Morgan Stanley quickly responded, with its Global Investment Committee (GIC) releasing a landmark report recommending the formal inclusion of Crypto Assets in clients' asset allocation.

This guideline carries significant weight, as GIC provides strategic guidance to approximately 16,000 financial advisors under its management, who oversee a total of up to $2 trillion in client assets. The core recommendations of the report are as follows: Opportunistic Growth Portfolio: It is recommended to allocate up to 4% in Crypto Assets. Balanced Growth Portfolio: It is recommended to allocate up to 2%. Conservative and Income-oriented Portfolio: It is recommended to maintain a 0% allocation.

In the report, Morgan Stanley described Bitcoin as a "scarce asset, similar to digital gold," acknowledging its long-term value in a diversified portfolio. This marks a shift in how Bitcoin is viewed by top investment banks, transforming from a mere "speculative product" to an allocatable "value asset."

Hunter Horsley, CEO of Bitwise, described the move as "a huge breakthrough", stating, "We are entering the mainstream era." If we estimate based on the $20 trillion in assets managed by Morgan Stanley, even if only a small portion of clients adopt the suggestion of 2% to 4%, it could mean an influx of up to $40 billion to $80 billion into the Crypto Assets market.

Morgan Stanley's position is not an isolated case; Wall Street seems to be forming a "encryption consensus": BlackRock: Previously stated that a Bitcoin allocation of 1% to 2% is "reasonable." Fidelity: Research indicates that an allocation of 2% to 5% can significantly enhance overall returns in a bull market. Grayscale: Their model analysis shows that the optimal allocation ratio is around 5%.

Even Vanguard, a firm that has long held an opposing stance on Crypto Assets, is recently reported to be reassessing its policy of prohibiting clients from trading Bitcoin ETFs. The winds on Wall Street have clearly changed.

Why now?

The collective shift of Wall Street is not coincidental; it is driven by profound macroeconomic factors and market logic.

First, there is the increasingly popular "Debasement Trade" worldwide. With the ongoing fiscal stimulus from the U.S. government and the expectation of interest rate cuts from the Federal Reserve, doubts about the long-term credit of the U.S. dollar have emerged, and the trend of "de-dollarization" is brewing. Ken Griffin of Citadel Securities warns that investors are initiating a wave of avoidance of U.S. sovereign risk. Against this backdrop, gold prices have surpassed $4,000 per ounce, and the value of gold held by global central banks has for the first time exceeded that of U.S. Treasuries.

Bitcoin, due to its fixed supply and decentralized characteristics, is regarded as "digital gold" and has become another key player in the fight against currency depreciation. Funds flowing out of dollar assets in search of scarce assets such as gold and Bitcoin as a safe haven has become a significant trend.

Secondly, the public endorsement by legendary investors has also played a role in promoting the trend. Hedge fund giant Paul Tudor Jones recently reiterated that in a "world of constant fiscal expansion," the fixed supply of Bitcoin gives it an advantage over gold. He revealed that he still holds a "single-digit" percentage of exposure to Crypto Assets in his investment portfolio and believes that the current market is similar to the explosive growth phase before the bursting of the internet bubble in 1999, with substantial upside potential remaining for the stock market and risk assets.

Despite the objections raised by gold bull Peter Schiff, who believes that the strength of gold indicates recession rather than prosperity, Jones's perspective undoubtedly provides strong confidence support for institutional investors.

From the Edge to the Core

From the tremendous success of BlackRock's IBIT to Morgan Stanley officially writing a 2%-4% allocation in Crypto Assets into its investment guidelines, and the profound macro-hedging logic behind it, a clear picture is emerging: Crypto Assets, especially Bitcoin, are transitioning from being perceived as high-risk fringe assets to becoming an indispensable strategic component of modern investment portfolios.

Wall Street's actions send a clear signal: for investors who can withstand volatility, the question is no longer "Should we allocate to Crypto Assets?" but rather "How should we allocate it?" As trillions of dollars in traditional funds begin to seriously examine this emerging asset class, the next round of structural transformation in the crypto market may just be beginning.