NEW YORK, February 29, 2024 — “Major brokers like Morgan Stanley are facing increasing pressure to add spot Bitcoin ETFs amid soaring trading activity.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, highlighted the growing urgency, tweeting, “Pressure is mounting on major U.S. investment firms as Bitcoin ETF demand continues to surge. Imagine being a Morgan adviser with a client requesting IBIT but having to admit, ‘I can’t offer it because my platform won’t allow it.’ That’s got to be awkward.”
IBIT refers to BlackRock’s spot Bitcoin ETF. On Wednesday, U.S.-based Bitcoin ETFs set a new record with over $7.6 billion in trading volume, significantly surpassing the previous record of $4.6 billion set on January 11.
Investment platforms such as Morgan Stanley, UBS, and Merrill Lynch are currently considering whether to incorporate spot Bitcoin ETFs, according to Balchunas. A source close to UBS indicated in January that only select clients had access to a limited range of Bitcoin ETFs, with advisors restricted from soliciting these investments.
Balchunas noted, “They want to see a track record and be assured of returns, but with such grassroots demand, they’ll need to expedite their decisions.”
Morgan Stanley is reportedly contemplating adding Bitcoin ETFs to its brokerage platform, although the bank has not yet responded to inquiries.
The trading surge coincided with Bitcoin surpassing $63,000 on Wednesday, a level not seen since late 2021.
BlackRock’s ETF led the charge with over $3.3 billion in trading volume, including $612 million in inflows. Grayscale and Fidelity’s ETFs recorded volumes of about $1.8 billion and $1.4 billion, respectively, but Grayscale’s ETF continued to experience outflows, with $216 million exiting the fund.
Market makers attribute the volume surge primarily to natural demand rather than algorithmic or arbitrage activities. Balchunas described the trading frenzy as “officially a craze,” noting that nine of the ETFs, excluding Grayscale, had already surpassed the previous day-one record of $2.6 billion by midday Wednesday. “These numbers are extraordinary and highly unusual,” he added.”