Morgan Stanley, a titan on Wall Street, is knee-deep in the grunt work to possibly bring spot Bitcoin ETFs to its trading platform. This news comes from a couple of company insiders clued into the matter. They spilled the beans that Morgan Stanley, a heavyweight in the U.S. broker-dealer league, has been mulling over this idea ever since the Securities and Exchange Commission gave the green light for spot Bitcoin ETFs in the States back in January.
The big money has already started to flow into these Bitcoin ETFs, and I’m talking tens of billions of dollars. But the real flood of investments is expected to kick off when these ETFs become available through the major leagues of registered investment advisors (RIAs) and broker-dealer platforms, including the likes of Merrill Lynch, Morgan Stanley, Wells Fargo, and the rest of their buddies.
Right now, the U.S. market is seeing action from 10 spot Bitcoin ETFs. Leading the pack in assets are Grayscale’s GBTC, BlackRock’s IBIT, and Fidelity’s FBTC. Which ones Morgan Stanley will offer up to its clients is still up in the air.
Back in 2021, Morgan Stanley became the first major U.S. bank to open the doors for its rich clients to dive into Bitcoin funds. This was officially announced during their first-quarter earnings call in April 2021, signaling a big shift towards giving their wealth management clients a taste of Bitcoin through a couple of external crypto funds.
Jonathan Pruzan, the firm’s former CFO at the time, shared that they were letting qualified investors get their hands on two passive funds, courtesy of Galaxy Digital and NYDIG. Pruzan’s words, “As we see more interest, we’ll work with regulators to provide services we think are appropriate,” echoed the bank’s proactive stance from three years ago.
On the economic front, the U.S. is slowly getting back on its feet after the pandemic’s blow. Just this month, the Federal Reserve noted a dip in inflation to 3.1% for January, which was more than what was anticipated. Despite the slow recovery, the dark cloud of a potential recession hasn’t quite cleared.
Ellen Zentner, Morgan Stanley’s chief U.S. economist, doesn’t shy away from stating the inevitable – a recession is on the horizon for the U.S. economy, though it might not hit this year. Zentner’s guarantee of a “hard landing” points to the delayed effects of tight monetary policies not yet fully realized. She warns that the financial policy moves made will start to bite over the next year and a half, citing a spike in corporate defaults and a drop in bank lending as indicators of the tightening grip.
Despite this, the Consumer Price Index (CPI) stubbornly remains above the Federal Reserve’s 2% sweet spot, even as inflation rates begin to cool down.
Meanwhile, Bitcoin (BTC) has been on a rollercoaster, recently shooting up past the $64k mark for the first time in over two years, putting a smile on nearly every BTC holder’s face. This upsurge is likely fueled by the aforementioned wave of institutional cash pouring into Bitcoin.
In spite of this, the larger economic situation in the United States may potentially throw a wrench into the upward trajectory of Bitcoin in the weeks ahead. There is a possibility that the Federal Reserve’s reluctance to cut interest rates in March will put a damper on the price increase regarding Bitcoin. At press time, Bitcoin was worth $62,007.
