Morgan Stanley views Bitcoin as institutional investment asset

Marco Green
November 7, 2018

The investors placed complete faith in it as a resolution for all drawbacks in the financial system.

Green added: “This is also underscored by the United Kingdom government Cryptoassets Taskforces final report which states that ‘the market is continuing to evolve rapidly', before adding ‘there is increasing institutional investment in this space, and many banks are starting to explore how they can interact with this growing market.

Several discoveries in the Bitcoin space have resulted in the thesis evolving over time.

Notably, irrespective of the persisting bear market seen throughout the year along with the price drop, Morgan Stanley stays adamant about Bitcoin and altcoins managing to constitute a "new institutional investment class" since 2017.

In a note dated October 31, Morgan Stanley mapped the gains of crypto assets, noting that the value of assets managed at these funds has soared to $7.1 billion, from only $675 million at the beginning of January 2017.

Owing to the fact that major financial institutions are increasingly lending support towards cryptocurrencies further supports this thesis.

The American investment bank's report also noted that the crypto industry is not attracting as many retail investors as it did previously.

Other factors that may be attributed to more institutional presence, or interest, in the crypto space include the immutability of most types of blockchain-based transactions, and market volatility, the report noted. The report cites Fidelity's new crypto services division, investments in Seed CX, BitGo and Binance, regulatory approvals and Coinbase's recent fundraising round as substantial claims for their thesis.

It also pointed out the problems linked to stable coin trading such as Bitcoin "moving increasingly towards trading vs the stable coin USD-Tether (USDT)", the report states, referring to the controversial, dollar-linked token operated by Tether. These were the absence of regulations in the space, lack of custodian solutions and a steep shortage of established financial institutions in the space.

Many media giants have described this document as one of the strongest signals yet to indicate Wall Street's indulgence with cryptos and BTC in particular also appreciating it for its positive nature. In fact, about 50 percent of all bitcoin trades are now against another crypto asset - which is a fairly recent trend that picked up previous year. Trading crypto- fiat requires going through the banking sector which charges a higher fee.

Crypto startups are now hopping on the trend, with exchanges and other companies developing their own stablecoins as "part of the next wave of development".

Other reports by Click Lancashire

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