Wall Street Giant Morgan Stanley Enters! Will it Shake Up the Bitcoin Fund Market?

▲ Bitcoin (BTC), Morgan Stanley/ChatGPT generated image ©

U.S. traditional finance giant Morgan Stanley has finally thrown its hat into the ring in the Bitcoin (BTC) spot ETF market, taking a significant first step. However, it appears insufficient to overcome the stronghold of BlackRock, which already enjoys a first-mover advantage. Despite wielding an unprecedentedly low fee as its weapon, it exposed the limitations of a latecomer, revealing the harsh reality and fierce competitive landscape of the fund market.

According to investment media FXStreet on April 9 (local time), Morgan Stanley's Bitcoin spot ETF, the first to be launched by a U.S. bank, had a smooth debut, recording a net inflow of $30.6 million on its first day of trading. The fund, which began trading on NYSE Arca, recorded a trading volume of $34 million, easily surpassing Bloomberg analyst Eric Balchunas's projection of $30 million for the first day's trading volume.

As of April 8, the Morgan Stanley fund held 444.4 Bitcoins, valued at approximately $31.7 million, which accounts for 0.03% of the 1.29 million Bitcoins held by all U.S. spot Bitcoin ETFs. Morgan Stanley engaged in aggressive marketing by setting the lowest fees in the industry, but it had to settle for the second-highest inflow, trailing behind BlackRock's fund, which attracted $40 million on its launch day.

Despite the new fund's strong performance, it was insufficient to prevent overall capital outflow from the crypto asset market. Fidelity's fund saw an outflow of $79 million, Ark 21Shares' fund saw $75 million, and Grayscale's fund experienced redemptions of $11 million. As a result, the U.S. Bitcoin spot ETF market recorded a total net outflow of $124.5 million that day. Despite a massive inflow of $471 million on Monday, the selling trend continued for two consecutive days, following a $159 million outflow on Tuesday.

Morgan Stanley's debut performance is somewhat modest when compared to the explosive demand seen when first-generation funds launched in January 2024. At that time, Grayscale and BlackRock funds recorded overwhelming trading volumes of $2.3 billion and $1 billion respectively on their first day, with BlackRock's fund attracting $112 million in a single day.

Nevertheless, Eric Balchunas noted the $60 million trading volume benchmark for recently launched products, such as the Canary Capital XRP (Ripple) spot ETF, and assessed Morgan Stanley's debut as one of the best fund launches over the past year. This is interpreted as a positive sign that Wall Street's giant traditional financial institutions remain confident in the long-term growth potential of the crypto asset fund market.

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