The launch of Morgan Stanley’s bitcoin ETF marks a significant challenge to BlackRock’s leading iShares Bitcoin Trust (IBIT), boasting $55 billion in assets. The new ETF, MSBT, begins trading with an expense ratio of 0.14%, undercutting IBIT’s 0.25% fee.
Both ETFs hold bitcoin and track its price, highlighting cost as a primary differentiator alongside liquidity and access. Since its inception, IBIT has dominated in terms of scale and trading activity, becoming the most liquid option for shares and options tied to bitcoin ETFs.
Despite MSBT’s lower fees, James Seyffart from Bloomberg Intelligence suggests that replicating IBIT’s liquidity may be challenging for Morgan Stanley. However, he notes the launch will shift market dynamics.
Morgan Stanley leverages its expansive wealth management network to potentially redirect client allocations toward MSBT more easily than other funds like IBIT. Nate Geraci of the ETF Store emphasizes distribution as a critical factor in this space, with Morgan Stanley’s extensive advisor base offering a significant advantage.
Geraci points out that MSBT’s fee is 11 basis points lower than IBIT’s, enough to attract investor and BlackRock attention.
Initially, market inflows favored established issuers like BlackRock due to their liquidity. However, as the market matures with more trusted entrants, investors are becoming increasingly sensitive to fees.
Morgan Stanley’s entry could accelerate this trend, even if IBIT maintains its lead in trading volume. The evolving landscape now presents a clearer split: IBIT provides depth for active traders, while newer ETFs like MSBT focus on cost and distribution advantages. Morgan Stanley’s vast wealth management network, overseeing trillions in client assets, strengthens its market position.
Though IBIT currently serves as the benchmark, its dominance could be tested by falling fees and new competitive pressures.