Morgan Stanley Commits to Bitcoin: ETF Inflows to Soar?

• Morgan Stanley plans to start recommending Bitcoin ETFs to customers soon.
• The firm reportedly plans to start with only a select class of investors, and two approved 11 ETFs.
• Morgan Stanley’s increased commitment to Bitcoin has been rumored for months.

Bitcoin has enjoyed a significantly positive run in the past year, more than doubling in price to clinch new all-time highs of around $74,000 . The success of spot Bitcoin ETFs approved in January 2024 was a key contributor to this rise. In just eight months, these products have already raked in nearly $18 billion in net inflows, breaking multiple records along the way, but they may have yet to scratch the surface.

Wary of potential financial risks around the asset, banks have yet to commit to pushing Bitcoin ETFs to their customers. However, this status quo looks set to change soon, as Morgan Stanley, a $1.5 trillion in assets under management (AuM) bank, is set to take a bold step.

Morgan Stanley to Start Orange-Pilling Customers as Soon as Next Week

Morgan Stanley plans to start recommending Bitcoin ETFs to customers soon. On Friday, August 2, citing persons familiar with the matter, CNBC reported that in response to customer demand, the investment bank would allow advisors to start soliciting some clients to purchase shares of spot Bitcoin ETF offerings from BlackRock and Fidelity from Wednesday, August 7. This marks a shift from its policy of offering these products to customers only on request.

For a start, Morgan Stanley advisors would only be able to solicit Bitcoin ETF investments from clients with net worths of at least $1.5 million, who have a high-risk tolerance and are willing to make speculative investments. The investment bank will also not offer the ETFs to retirement accounts.

In addition to these restrictions, the bank intends to monitor clients’ portfolios to ensure that they are not overexposed to the asset. The sources, however, did not specify what would constitute excessive exposure. 

Crypto investors consider Morgan Stanley’s move significantly bullish, as it is likely to drive even more demand for Bitcoin through ETFs.

Meanwhile, the investment bank’s increased commitment to Bitcoin has been rumored for months.

A Move Months in the Making?

In April 2024, it was reported that Morgan Stanley was considering shifting to a solicited model for spot Bitcoin ETFs and establishing the required guardrails. 

"We're going to make sure that we're very careful about it. We are going to make sure everybody has access to it. We just want to do it in a controlled way," one of the executives had asserted at the time.

At the time of writing, Bitcoin’s price has yet to react to the investment bank’s recent move, trading flat at around $63,000.

On the Flipside 

• It had been earlier speculated that Morgan Stanley planned to launch its own Bitcoin ETF. This speculation has, however, since been dispelled .
• According to CNBC’s report, banks like Goldman Sachs, JPMorgan, Bank of America, and Wells Fargo continue to offer Bitcoin ETFs unsolicited.

Why This Matters

With Bitcoin ETF demand already outpacing the supply generated by miners, additional demand from Morgan Stanley’s move could have significant bullish price implications.

Read this for more on Morgan Stanley’s Bitcoin move:
Morgan Stanley To Supercharge Bitcoin ETF Demand: Here’s How

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