Institutions are making a fortune with Bitcoin! Wall Street increases investment: Trillions of dollars plan to allocate 2%–4% to cryptocurrencies?

In 2024, the U.S. Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF, which is seen as a watershed moment in cryptocurrency history. In less than two years, this decision not only fundamentally changed the market landscape but also brought astonishing returns to Wall Street’s financial giants. Now, as the enormous success of the ETF is validated, an even larger capital migration seems to be brewing. Led by top investment banks like Morgan Stanley, a quiet door to the crypto world is opening for the trillions of dollars of assets they manage.

The Birth of the Money Printing Machine

To understand Wall Street’s shift in attitude, one must first see the wealth effect created by Bitcoin spot ETFs. Among them, the asset management giant BlackRock’s launch of the iShares Bitcoin Trust (IBIT) is undoubtedly the brightest star.

Data shows that since its launch in January 2024, IBIT’s assets under management (AUM) have approached the $100 billion mark. Even more astonishing is that, with over $244 million in annual management fee income, it has become BlackRock’s most profitable ETF product. This achievement even surpasses those of traditional flagship funds that have operated for 25 years and manage assets several times larger, such as the SPDR S&P 500 ETF Trust (IVV).

IBIT’s success is not only reflected in profitability. It has also set records for attracting funds. For example, in the first week of October 2025, all Bitcoin spot ETFs saw a weekly net inflow of $3.2 billion, with IBIT alone accounting for $1.78 billion. On October 6th, the market experienced a single-day net inflow of $1.19 billion, the first “billion-dollar day” since July. This incredible ability to attract capital directly pushed Bitcoin’s price above $125k to a new all-time high, proving to the entire financial world that there is a genuine and huge demand for compliant, convenient Bitcoin investment channels.

Wall Street’s Consensus

BlackRock’s success is like a stone thrown into a calm lake, causing ripples across Wall Street. Investment banking giant Morgan Stanley responded swiftly, with its Global Investment Committee (GIC) releasing a milestone report that officially recommended including cryptocurrencies in client asset allocations.

This guidance is highly significant because GIC provides strategic advice to about 16,000 financial advisors managing a total of up to $2 trillion in client assets. The core recommendations are as follows:

• Opportunistic Growth Portfolio: suggest allocating up to 4% in cryptocurrencies.
• Balanced Growth Portfolio: suggest allocating up to 2%.
• Conservative and Income-Oriented Portfolios: recommend maintaining 0% allocation.

In the report, Morgan Stanley describes Bitcoin as “a scarce asset, similar to digital gold,” acknowledging its long-term value in diversified portfolios. This marks a shift in perception: Bitcoin has moved from being viewed solely as a “speculative asset” to a “value asset” that can be allocated within top-tier investment strategies.

Bitwise CEO Hunter Horsley called this a “huge breakthrough,” stating, “We are entering the mainstream era.” Even if only a small portion of Morgan Stanley’s $2 trillion in managed assets adopts the 2%–4% recommendation, it could mean an influx of up to $40 billion to $80 billion into the crypto market.

Morgan Stanley’s stance is not an isolated case; Wall Street seems to be forming a “crypto consensus”:

• BlackRock: previously stated that a 1%–2% Bitcoin allocation is “reasonable.”
• Fidelity: research indicates that a 2%–5% allocation can significantly boost overall returns in a bull market.
• Grayscale: its model analysis suggests an optimal allocation ratio of about 5%.

Even Vanguard, which has long opposed cryptocurrencies, has recently been reevaluating its policy of banning clients from trading Bitcoin ETFs. The wind on Wall Street has clearly shifted.

Why Now?

Wall Street’s collective turn is no coincidence, driven by profound macroeconomic factors and market logic.

First is the increasingly prevalent “debasement trade” worldwide. With the U.S. government’s ongoing fiscal stimulus and the Federal Reserve’s expected rate cuts, doubts about the long-term creditworthiness of the dollar are growing, and the “de-dollarization” trend is fermenting. Ken Griffin of Citadel Securities warned that investors are initiating a wave to hedge against U.S. sovereign risk. Against this backdrop, gold prices have broken above $4,000 per ounce, and the value of gold held by central banks worldwide has surpassed U.S. government debt for the first time.

Bitcoin, with its fixed supply and decentralized nature, is seen as “digital gold,” becoming another key player in this currency devaluation hedge trade. Capital flowing out of dollar assets into safe havens like gold and Bitcoin has become a notable trend.

Second, public endorsements by legendary investors have also played a role. Hedge fund titan Paul Tudor Jones recently reiterated that in a “world of ongoing fiscal expansion,” Bitcoin’s fixed supply gives it an advantage over gold. He disclosed that his portfolio still holds a “single-digit” percentage of crypto exposure and believes the current market is in a stage of explosive growth similar to the dot-com bubble burst in 1999, with stocks and risk assets still having significant upside.

Although gold bulls like Peter Schiff argue that gold’s strength signals recession rather than prosperity, Jones’s view undoubtedly provides strong confidence support for institutional investors.

From Marginal to Core

From BlackRock’s IBIT’s huge success to Morgan Stanley’s formal inclusion of 2%–4% crypto allocations in investment guidelines, and the underlying macro hedging logic, a clear picture is emerging: cryptocurrencies, especially Bitcoin, are shifting from being seen as high-risk fringe assets to becoming an integral part of modern investment portfolios.

Wall Street’s actions send a clear signal: for investors who can tolerate volatility, the question is no longer “whether to allocate to crypto,” but “how to allocate.” As trillions of dollars of traditional funds begin to seriously consider this emerging asset class, the next phase of structural change in the crypto market may just be beginning.