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Bitcoin could see surge in capital inflow as Morgan Stanley, big banks consider dipping toes

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FXStreet in Market News 12 386323
April 25, 2024 22:56

content provided with permission by FXStreet

  • Morgan Stanley is considering allowing advisors to recommend Bitcoin ETFs to clients per an AdvisorHub report. 
  • Bank of America’s Merrill Lynch and Wells Fargo currently offer Bitcoin ETFs on an unsolicited basis. 
  • Bitcoin could mimic the capital inflow and price gains in Gold post ETF launch. 

Morgan Stanley is considering allowing its brokers to actively recommend Bitcoin Exchange-Traded Funds (ETFs), according to an AdvisorHub report. While big banks have been cautious of cryptocurrencies in general, Bank of America’s Merrill Lynch and Wells Fargo are dipping their toes, offering Bitcoin ETFs to ultra-wealthy clientele. 

Morgan Stanley and other big banks shift approach to cryptocurrency ETFs

Big US banks like Morgan Stanley and its peers have been slow to open up to Bitcoin ETFs, adopting a cautious approach towards the investment product. In some cases, big banks have offered Bitcoin ETFs only on an unsolicited basis, exclusively to ultra-wealthy clients. 

In the case of Merrill Lynch, customers with at least $10 million in assets can purchase Bitcoin ETF. 

A new AdvisorHub report surfaced, stating that Morgan Stanley bank is exploring allowing its brokers to actively recommend Bitcoin ETFs. This could usher a rise in capital inflow to the investment product. Rising capital inflow typically influences price positively, as it feeds into demand for the asset. 

Previously, Morgan Stanley only permitted unsolicited Bitcoin ETF purchases. The move by the big bank can be interpreted as an adjustment to capitalize on the demand for Spot Bitcoin ETFs for clients looking to hold BTC without direct exposure. 

Morgan Stanley did not immediately respond to FXStreet’s request for comments.

Bitcoin ETF approval and surging capital inflow could mimic Gold 

Spot Bitcoin ETF issuers have rapidly accumulated BTC. The largest Spot BTC ETF, BlackRock’s iShares Bitcoin Trust (IBIT), holds $17.62 billion in the asset. The surge in the ETF’s Bitcoin holdings mimics the introduction of SPDR Gold Shares (GLD) in 2004. 

The introduction of GLD pushed the Gold price 254% higher within seven years of its launch. Spot Bitcoin ETFs have mirrored the impact in a shorter period of time.