Morgan Stanley’s Bitcoin Decrypted Report Sees Crypto As ‘New Institutional Asset Class’


Banking Giants Morgan Stanley Sees Bitcoin As The ‘New Institutional Asset Class’

This week has been astonishing for the crypto ecosystem, especially when it comes to adoption by institutional investors. It hasn’t even been a day since BitcoinExchangeGuide had reported that one of the biggest accounting firms in the world, Ernst & Young, released their Etherum based Zero Knowledge Proof (ZKP.) Now, there is news from another financial giant, Morgan Stanley.

Dated October 31st, the firm released an update deemed “Update: Bitcoin, Cryptocurrencies and Blockchain” to the previous release “Bitcoin Decrypted: A Brief Teach-In and Implications.” In the analysis, researchers of Morgan Stanley examined the behavior of Bitcoin in the last 6 months and noticed some key insights.

One of the most conspicuous of the findings was their “rapidly morphing thesis,” which shows that investors have an increasing amount of trust in the digital asset. Institutional investors now see it as a tool to solve the existing problems of the current financial structure and a new investment class.

The thesis was supportive of Bitcoin because it constantly improves and solves its own problems perpetual recording of all transactions, hard forks and more. Morgan Stanley has increasingly been bullish on Bitcoin with upwards of $7 billion of the asset being stored in there hedge funds, VC firms or private equity entities.

The report also focuses on Stablecoins and view it as digital assets that are aiming towards price stability. They have noted that trading of Tether has increased manifolds recently. Notably, more than half of Bitcoin trading is with coins that were made less than a year ago.

The report illustrates this point in detail:

“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 almost 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.”

Morgan Stanley views stablecoins as the next wave of crypto growth. However, the report warns that stablecoins with low transactional costs, high liquidity and the ones that are compliant with regulators are likely going to survive.

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