Brazil's Largest Private Bank Recommends 3% Bitcoin Allocation for Clients

Itaú Unibanco Holding SA, the largest private bank in Latin America, suggests that clients allocate up to 3% of their portfolios to Bitcoin by 2026. The bank views this cryptocurrency as a safeguard against the depreciation of the Brazilian real, rather than a speculative investment.

Key Takeaways

Itaú Unibanco suggests clients allocate up to 3% of their portfolios to Bitcoin for the year 2026.
The bank sees Bitcoin as a hedge against the depreciation of the Brazilian real, not merely a speculative asset.
Aiming for diversification, Itaú recommends a Bitcoin investment of 1% to 3%, highlighting its low correlation with conventional assets.
The bank warns against attempting to time the market and advocates for a long-term investment strategy.
Itaú’s advice aligns with recommendations from major U.S. banks regarding cryptocurrency investments.

Reasons for Itaú's Bitcoin Recommendation

In a recent strategy memo, analysts from the Sao Paulo-based bank highlighted two main challenges: global price volatility and fluctuations in the domestic currency. They contend that these factors require investors to adopt a fresh approach to their portfolio strategies.

Itaú proposed a Bitcoin allocation of between 1% and 3% to capture profits that are not influenced by local market conditions. They noted, “Bitcoin is an asset that differs from fixed income, traditional equities, or local markets, possessing its own unique dynamics and return potential. Its global and decentralized nature also serves as a protective measure against currency risks.”

Importantly, Itaú clarified that Bitcoin should not constitute a primary investment but should serve as an additional allocation, tailored to each investor's risk profile. The goal is to achieve returns that are less affected by domestic economic trends while also providing some defense against currency decline and maintaining opportunities for long-term growth.

The bank pointed to Bitcoin's low correlation with conventional assets, suggesting that a minimal investment of 1% to 3% could boost portfolio diversification without adding significant risk.

Bitcoin vs. Traditional Assets

Source: Itaú

The memo emphasized that this strategy requires a level of moderation and discipline, focusing on a long-term perspective rather than being swayed by short-term market fluctuations. Itaú cautioned, “Trying to achieve ‘perfect timing’ in assets like Bitcoin or other global markets is risky and often ineffective.”

Itaú's recommendation aligns with the forward-thinking advice being offered by major global banks, aiming to reduce the differentiation from US counterparts. Notably, U.S. financial institutions such as Morgan Stanley and Bank of America have advised their clients to allocate up to 4% of their assets to Bitcoin.

For Brazilian investors, the situation presents unique challenges. Itaú indicated that with economic cycles becoming shorter and external shocks more prevalent, Bitcoin’s “hybrid nature” distinguishes it from traditional investment assets. The bank characterized the leading cryptocurrency as both a high-risk asset and a global store of value, arguing that this dual role provides a level of resilience that traditional fixed-income investments can no longer ensure.