Morgan Stanley: Crypto Market Is Ready For Large Investment From Hedge Funds

It’s time for major players in the financial world to think about how to enter the cryptocurrency market, said Morgan Stanley.

The institutionalization of cryptocurrencies opens up «great opportunities» for asset managers. This opinion was expressed by analysts at Morgan Stanley in their report prepared in cooperation with the consulting company Oliver Wyman. The bank emphasizes that the market capitalization, which grew from less than $ 50 billion in 2017 to $ 2 trillion in April 2021, speaks of the market’s readiness for large players.

According to Morgan Stanley, asset managers looking to enter the crypto market should consider investing in cryptocurrencies either through a mixed asset fund or through separate passive / active crypto products.

The bank acknowledges that the private investor segment will continue to pursue cryptocurrencies. They are primarily of interest to «technology-savvy asset owners.» However, managers need to develop their own products to meet demand, the bank said.

Regulatory uncertainty as well as volatility can be challenging for large players. However, despite the pitfalls, cryptocurrencies can form a new market with $ 300 billion in client funds and $ 1 billion in revenue if the regulator approves ETFs for cryptocurrencies.

Morgan Stanley’s interest in the cryptocurrency market has been known for a long time. For example, in January of this year, Counterpoint Global, a division of Morgan Stanley that manages investments in the order of $ 150 billion, considered buying bitcoin as an investment asset. Whether the division has invested in cryptocurrency remains unknown.

However, it is known that Morgan Stanley acquired 10% of MicroStrategy in the same month. The company is especially known on the crypto market as the largest public holder of bitcoin. For example, at the time of this writing, MicroStrategy holds 105,085 BTC (~ $ 3.6 billion) in reserves.

Morgan Stanley buys 29,000 shares of Grayscale Bitcoin Trust

Morgan Stanley owns 28,289 shares of the Grayscale Bitcoin Trust through its European subsidiary Europe Opportunity Fund. This was reported in the report to the exchange regulator.

At the time of this writing, the announced investment is estimated at $ 827,000. Still, Grayscale is not doing very well. The trust margin is still in the negative zone. At the time of this writing, GBTC margins remain at 9.5%.

Grayscale Bitcoin Trust chart

Recall that in early May, Digital Currency Group (DCG), the parent company of Grayscale, announced a deal to buy GBTC shares for up to $ 750 million. Prior to that, the company acquired GBTC shares for $ 193 million. Moreover, DCG announced its intention to continue to buy back shares on the stock market at its sole discretion. However, it remains unknown whether the company bought up GBTC shares for $ 750 million.

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