BBVA Bitcoin Allocation of 3% ‘Not Taking a Huge Risk’ for Private Clients

Key Takeaways

• BBVA’s private bank now advises its wealthy clients to invest in Bitcoin.
• The bank recommends a portfolio allocation of between 3% and 7%.
• A growing number of advisors suggest incorporating bitcoin into investment strategies.

BBVA’s private bank now advises its wealthy clients to invest in Bitcoin, a senior executive revealed on Tuesday, June 17.

Speaking at a conference in London, Philippe Meyer, head of digital and blockchain solutions at BBVA Switzerland, revealed that the bank recommends a portfolio allocation of between 3% and 7% Bitcoin, depending on risk appetite.

Private Banks Embrace Bitcoin

While traditional financial institutions were initially wary of crypto due to its high volatility and limited track record, in recent years, a handful of institutional titans have softened their stance.

A watershed moment came with the approval of spot Bitcoin ETFs in the U.S. last year.

Funds managed by BlackRock, Fidelity and others grant investors exposure to Bitcoin via a regulated vehicle. This has paved the way for even traditionally risk-averse investors like pension funds to dip their toes in crypto.

Among the largest American private banks, Goldman Sachs was the first to let its advisors pitch Bitcoin ETFs in mid-2024.

Since then, other banks have followed suit. Even JPMorgan, whose CEO is a renowned Bitcoin skeptic, finally caved earlier this year.

Diversifying Investment Portfolios

BBVA’s recommended portfolio allocation reflects one of the longstanding principles of investment advice: a diversified portfolio protects against shock if any single asset experiences wild price swings.

For example, if the price of Bitcoin dropped 25%, an investor with a 7% allocation would still only experience a 1.75% drop in their overall portfolio value.

For decades, the classic 60/40 portfolio (60% stocks, 40% bonds) was the gold standard of diversification. But in recent years, alternative assets like precious metals and crypto have also entered the mix.

Risk Aversion

Given Bitcoin’s volatile price history, most advisors still err on the side of caution.

Introducing a 3% Bitcoin allocation is enough to “boost the performance,” Meyer said, adding that “you are not taking a huge risk.”

Nevertheless, BBVA’s 3%-7% range is still at the aggressive end of the spectrum.

A 2024 article by Barron’s advises limiting Bitcoin exposure to 1%.

Meanwhile, BlackRock recommends a modest allocation of 1%–2%. It justifies this advice by highlighting that Bitcoin’s market cap is now equivalent to one of the world’s largest companies. These blue-chip stocks are typically equally well-represented in an index-weighted 60/40 portfolio.