The market of Bitcoin exchange-traded funds add a new major player and it is not minor: Morgan Stanley decided to take the leap and launch its own cash fundthe Morgan Stanley Bitcoin Trust (MSBT), in what is already emerging as one of the most relevant movements of the year for the crypto industry.
The key data is not only the product, but also who issues it: for the first time, a Large US Commercial Bank Competes Directly in Bitcoin ETF Businessa field until now dominated by managers like BlackRock and Fidelity.
On its first day of operations, the MSBT captured US$30.6 million in flows and registered a trading volume of US$34 million. An orderly start, aligned with market expectations, but still far from the levels that marked the initial launches of 2024.
To put it in context: the iShares Bitcoin Trust (IBIT) by BlackRockundisputed leader of the segment, added US$40 million on the same day and drive some $53 billion in assets under management (AUM).
The difference is abysmal. Even so, the Morgan Stanley fund starts with a clear competitive advantage: the price.
Bitcoin ETF: the commission war has already begun
The MSBT charges a annual commission of just 0.14%, the lowest in the market. It is 11 basis points cheaper than the IBIT (0.25%), in a business where the cost defines the investor’s final profitability.
The strategy is obvious: capture flows from institutional and high net worth investors that prioritize efficiency in long-term portfolios. In an increasingly commoditized market, in which all ETFs replicate the same asset, the Competition is transferred directly to fees and distribution.
The real impact of the launch goes beyond the first day numbers. Morgan Stanley arrives late, two years after the initial boom, but it does so at a different stage of the market: more mature, more competitive and with greater institutional presence. This changes the reading. It is not a “first hype“, but a confirmation of the trend.
The debut of the MSBT also left another relevant piece of information: the net flows of the day were negative. While IBIT and Morgan Stanley’s new fund added inflows, other ETFs showed strong outflows, the Fidelity Wise Origin Bitcoin Fund (FBTC) lost $79 million and the ARK 21Shares (ARKB) near US$75 million. Added to this were ransoms of US$11 million in the GBTC. Result: US$124.5 million of net outflows on the day.
Manuel Beaudroit, CEO and co-founder of Belo, explains to iProUP that the advance of Bitcoin ETFs marks a structural change more than an isolated novelty within the market.
“At some point the possibility had already been opened for brokers to offer this type of products, but the internal conditions were not yet in place, whether due to systems, regulation or other factors. Now a gigantic door has opened: these instruments are going to be able to be offered in a much more structured way and that should have a very big impact on the market“says the expert.
In this context, he emphasizes that the competitive scenario is still uncertain and that it is not necessarily a zero-sum game. “It’s not clear who is going to win. In many cases, the products are complementary“he points out.
For Beaudroit, “the point now is to distribute the asset, to start making catch up on the market and see how it pulls. You have to give it a few months to understand how it evolves,” he adds.
Regarding the role of the commissions, it relativizes their impact as a determining factor at this stage. “Bitcoin has been available since 2009. What delayed the arrival of other audiences had not to do with the price or commissions, but with a structural limitation: institutional money is inside these organizations and cannot easily leave“he remarks.
And he goes deeper: “Many times, when trying to sell this type of assets to large brokers, the answer was the same: ‘my clients want Bitcoin, but the money cannot leave the bank account’. That made adoption very difficult, because the instrument did not exist.”
According to the executive, that bottleneck has just been broken. “Now that’s changed. Bitcoin can be accessed from those same accounts, and that’s where we’re going to start to see big money moveshe anticipates.
In parallel, it stands out that it is an industry with high barriers to entry. “They are highly regulated markets, which require significant capital, specific knowledge and capacity to structure, distribute and sustain these products. It is a ladder in which each step is more complex,” he described.
Furthermore, he points out that historically there was a classic problem: available capital. “It’s chicken and egg logic: if there is no liquidity, there is no demand; and without demand, it makes no sense to offer the product. But now we are talking about instruments that already have a track record and the support of very great players“, he indicates.
Finally, Beaudroit presents a long-term vision, focusing on the role of institutional capital. “The impact is going to be significant, although in the short term it is difficult to measure. It is likely that Bitcoin reaches values over a million dollarsbut with a lower growth rate than in the past. He access to institutional money is going to be the main driver of that movement,” concludes the expert.
Wall Street and crypto: Morgan Stanley’s entry reorders the map
José Luis del Palacio, co-founder of Decrypto, points out that Morgan Stanley’s emergence into the Bitcoin ETF market must be analyzed with nuances, especially when compared to BlackRock’s positioning.
“The first thing to understand is that Morgan Stanley and BlackRock operate in different layers of the financial system. They are not comparable in terms of core business,” he explains.
“On the one hand, Morgan Stanley is more oriented towards intermediation: works like a traditional broker, with a strong focus on banking. Instead, BlackRock is an investment specialistwhose core activity is fund management, where ETFs are a key pillar,” details Del Palacio.
Although Morgan Stanley has a division of asset managementits DNA continues to be more linked to banking. “They are two different structures, with different expertise and positioning within the market,” adds the expert.
In that context, he warns that the current leadership in Bitcoin ETFs will not be easy to dispute. “Today the BlackRock ETF is the most liquid, the one with the most volume and practically works as a market reference. It is on a comparable level to the world’s largest ETFs, making it very difficult to dethrone in the short term“.
Regarding the strategy of competing with lower commissions, he relativized its impact. “I don’t think there is a significant migration by price. When you compete only for feesIn general what is done is erode the market“.
And he was direct about the behavior of the institutional investor: “The institutions that are the target audience of these productsthey do not move by a few basic points of difference. They search quality, liquidity and support. “They want to know which firm is behind the instrument.”
Along these lines, he concludes that the new ETF will hardly alter the competitive balance in the short term. “I don’t think that, due to a difference in commissions, Morgan Stanley will end up capturing the market. It will probably be one more player within the existing offer, without generating an immediate disruptive change.”
What experts expect from the new player in the ETF market
Paula Chaves maintains that Morgan Stanley’s entry into the BTC spot ETF business confirms that the market is already entering a new phase, with a clearly more institutional profile.
“More than an immediate dispute for leadership, what is beginning to take shape is a Deeper competition between big Wall Street playerswhere the differential is not only due to the product, but also due to the capacity of distribution and capture of flows,” warns Chaves.
In this framework, the bank’s debut is solid despite being a late entrant, says the expert who highlights that Morgan Stanley arrives with a defined strategy: “Lower commissions and its own client base that allows it to scale quickly.”
However, he says that the fact that the market leader continues to attract flows even with this new offer “makes it clear that Competition is not defined solely by price“.
As he explains, a more competitive cost structure can erode participation, but gradually and concentrated in certain segments. He leadership of the iShares Bitcoin Trust (IBIT) remains solid, not only due to its size, but also due to liquidity and accumulated trust: in this type of instruments, the quality of execution and market depth weigh as much – or more – than a few basis points of difference in commissions.
There appears the main barrier to entry: “Liquidity generates more liquidity. IBIT already works as a natural vehicle for many institutional investors, and replicating that network effect takes time, even for an actor of the weight of Morgan Stanley,” defines Chaves.
In this context, the competitive impact is, in general terms, positive. It puts downward pressure on fees, expands access channels to capital, and reinforces the institutionalization of Bitcoin. “More than a replacement of the leader, what is expected is a partial redistribution of flows within a market that continues to expand“he concludes.
