On April 8, Morgan Stanley launched its spot Bitcoin exchange-traded fund (ETF) under the ticker MSBT on NYSE Arca, achieving $34 million in trading volume and selling 1.6 million shares on its debut day. The MSBT ETF acquired 430 Bitcoin following net inflows of $30.6 million.
Bloomberg’s ETF analyst Eric Balchunas remarked that MSBT’s performance places it among the top 1% of all ETF launches over the past year, noting that most new ETFs in various asset classes average less than $1 million on their first day. This development signifies a shift as traditional finance begins to manufacture and price Bitcoin exposure directly, impacting fees, advisor flows, and future demand for ETFs.
In comparison, while the broader Bitcoin ETF sector experienced $124 million in outflows on its initial trading day, only MSBT and BlackRock’s iShares Bitcoin Trust (IBIT) reported positive inflows. The launch of MSBT marks the first time a major U.S. bank has issued a spot Bitcoin ETF under its own name, igniting fee competition in the market.
MSBT charges a 0.14% unitary delegated sponsor fee, making it the lowest-cost option available to American investors and undercutting competitors like IBIT’s 0.25% expense ratio and Grayscale’s Bitcoin Mini Trust ETF at 0.15%. This competitive pricing could prompt other asset managers to reduce their fees.
Morgan Stanley’s advantage lies not just in low fees but also in its extensive distribution network, with approximately 16,000 wealth management advisors overseeing up to $9.3 trillion in client assets. Nate Geraci of NovaDius Wealth Management highlighted that effective distribution is crucial in the ETF market.
The firm’s strategy includes recommending a Bitcoin allocation of 2% to 4% for growth-oriented portfolios while advising against it for conservative ones. MSBT operates using institutional-grade infrastructure, tracking Bitcoin performance via the CoinDesk Bitcoin Benchmark 4PM NY Settlement Rate and leveraging Coinbase and BNY Mellon for digital asset custody and administrative services.
Amy Oldenburg, head of digital asset strategy at Morgan Stanley, stated that the fund exemplifies a commitment to integrating traditional governance with digital assets to meet long-term client needs. As Bitcoin stabilizes around $70,000 after peaking above $126,000, MSBT’s launch provides an opportunity for traditional capital accumulation during this consolidation phase.
Despite its strong start, MSBT faces challenges in competing against BlackRock’s IBIT, which holds over $55 billion in net assets. Balchunas believes that while MSBT is well-positioned, surpassing IBIT would require a ‘miracle.’ The fund’s ability to maintain initial momentum against IBIT’s liquidity and market presence will determine its impact on the competitive landscape.
The article first appeared on CryptoSlate.