Morgan Stanley Report Calls Bitcoin As The New Institutional Investment Class

Financial banking giant Morgan Stanley recently released an update to its report “Bitcoin Decrypted: A Brief Teach-in and Implications”. In the latest update, the banking giant presented a changing scenario in the Bitcoin space while providing some interesting insights.

Morgan Stanley report says that there is a growing interest among institutional investors for Bitcoin and other currencies. Simultaneously, the retail participation in the crypto space remains lukewarm at the moment.

The report takes us through the researchers’ observations about the Bitcoin lifecycle so far, while calling it as the rapidly morphing thesis. The report begins while referring to Bitcoin as “electronic cash” in 2009 to all the evolving times Bitcoin has been through.

In the latest update, the report says that investors are still showing a full-confidence in the world’s largest cryptocurrency. Bitcoin is often referred to as revolutionary payment system to the traditional finance. Moreover, Morgan Stanley notes that the cryptocurrency is now emerging as the new “institutional investment class”.

The entire Bitcoin ecosystem has been subjected to a number of issues during its evolution in the last decade. These includes a series of exchange hacks, hard forks, growing competition from alternate cryptocurrencies and much more. However, summing all these tides, Bitcoin still continues to dominate the crypto market as the most popular choice for crypto investors.

The report authors note Bitcoin growing popularity among institutional investors. Furthermore, it notes that the amount of crypto assets under institutional management is on a gradual increase since January 2016. A total of $7.11 billion worth crypto assets are currently being handled by venture capital funds, private equity firms, and hedge funds.

Moreover, in the last few months we are also witnessing a growing number of financial giants joining the crypto industry. ICE’s announcement of its Bakkt platform or Fidelity’s announced of its Fidelity Digital Assets is a testament to this. Existing players like Coinbase are also involved in working out new products for institutional entry. More focus is currently being laid on the development of safe and secure storage of crypto assets and different custodial solutions.

However, the regulatory uncertainty surrounding the crypto space is one of the major reasons for the slow institutional participation.

On the other hand, the report also noted the growing acceptance of stablecoins in the Bitcoin trading volumes. Bitcoin is "moving increasingly towards trading vs the stable coin USD-Tether (USDT) [sic]," the report states.

It further adds: "USDT took an increasing share of BTC trading volumes as cryptocurrency prices started falling. This occurred because many exchanges only trade crypto->crypto and not crypto->fiat. Trading crypto->fiat requires going through the banking sector which charges a higher fee. Also as bitcoin prices fell, so did most all other coins so if owners wanted to come out of bitcoin holdings, they needed to go to another asset which was closer to the valuation of the U.S. dollar."

A number of crypto startup are now releasing their stablecoins pegged to the fiat currencies.