Morgan Stanley doubled down on its bitcoin exposure by buying into the Grayscale Trust: filing

Bitcoin
Bitcoin

  • A Morgan Stanley fund owned 58,116 Grayscale shares worth $2.018 million by July 31, according to a SEC filing Monday.
  • In April, the same fund owned 28,298 shares worth $1.3 million.
  • “I like the idea here that you can bet small, win big,” Morgan Stanley’s Dennis Lynch said on crypto last week.
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Investment bank Morgan Stanley has been gradually ramping up its involvement in the cryptocurrency market this year, and recently doubled down on its bitcoin exposure via the Grayscale Bitcoin Trust (GBTC), according to a SEC filing Monday.

The Morgan Stanley Europe Opportunity Fund owned 58,116 GBTC shares worth $2.018 million as of July 31, according to a filing on Monday. Prior to that, the fund owned 28,298 shares worth $1.3 million as of April 30.

The Grayscale Bitcoin Trust issues shares that are solely tied to bitcoin and its market value.

Dennis Lynch, who heads Morgan Stanley’s asset management subsidiary Counterpoint, which is unrelated to the Europe Opportunity Fund, spoke recently at the Morningstar annual investment conference at which he laid out why he’s recently invested in bitcoin.

“I like the idea here that you can bet small, win big,” Lynch said.

“I like to say that bitcoin is like Kenny from South Park, he dies every episode and comes back again,” Lynch said. “And so … you see in the newspaper, the media, that bitcoin’s dead, it’s over this time, and it just continues to persist.”

Investment in cryptocurrencies has boomed this year and sent the prices of the major coins, including bitcoin, to record highs. Bitcoin, the largest by market value, currently trades around $41,000, having gained over 300% in the last 12 months alone. It is highly volatile, but has shown great resilience in the face of selling pressure.

Morgan Stanley is one of many major banks that is gradually increasing its exposure to the cryptocurrency market. JPMorgan gave its retail wealth clients access to crypto funds that included exposure to the Grayscale Bitcoin Trust in July this year.

The Grayscale Trust was established in 2013 and is now the largest public holder of bitcoin. The trust has $28.2 billion in assets under management according to its website. Its shares are currently trading around $34.18. They were valued at around $36 when Morgan Stanley’s fund said it owned the new shares.

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The odds of a 20% correction in stocks are rising as the market transitions to the next stage of its cycle, Morgan Stanley warns

Traders work at the trading floor in the New York Stock Exchange in New York, the United States, Aug. 19, 2021.
  • The odds of a 20% correction in equities are increasing, Morgan Stanley said.
  • The analysts called this the “Ice” scenario. They also laid out another outcome called “Fire.”
  • “Ice” is if earnings revisions slow down while “Fire” is if the Fed begins to remove monetary accommodation.
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The slump in the benchmark S&P 500 on Monday offers a different sentiment from the market’s seven-month run since the beginning of this year.

It means the odds of a 20% correction in equities are increasing as the market transitions to the next stage of its cycle, Morgan Stanley said in a note published Monday.

Analysts – led by Michael Wilson – called this scenario “Ice,” which would happen if earnings revisions and higher-frequency macro datapoints slow down.

They laid out another near-term risk path for the stock market, called “Fire,” a more optimistic outlook that would occur if the Federal Reserve begins to remove monetary accommodation as the US economy overheats.

Ice, the more likely of the two outcomes, they said, would be “destructive” as it would translate to a 20% correction in the S&P 500, whereas Fire would only lead to a “modest and healthy” 10% correction.

“Will it be Fire or Ice? We don’t know, but the Ice scenario would be worse for markets and we are leaning in that direction,” the analysts said. “We think the mid-cycle transition will end with the rolling correction finally hitting the S&P 500.”

Still, analysts said they are bracing themselves in the event of an Ice outcome.

“We point to downside risk to earnings revisions, consumer confidence, and PMIs,” the analysts said. “These indicators are all highly correlated to S&P price on a rate of change basis, and thus we highlight what downside in these measures could mean for the S&P 500.”

As a result, the analysts said they continue to recommend more defensively oriented quality (healthcare and staples) to protect from the Ice scenario while “keeping a leg in financials” to participate in a Fire outcome.

“Many commentators and clients continue to point to the S&P 500 near all-time highs as a leading indicator and rationale for even higher prices ahead,” the analysts said. “However, in our view, the relative strength of the S&P 500 and Nasdaq 100 is further confirmation that the market understands the mid-cycle transition narrative.”

This mid-cycle transition, the analysts said, is “right on schedule,” especially given the fiscal stimulus during the pandemic.

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Bitcoin rises 5% to $58,000 after Fed keeps policy steady and Morgan Stanley offers crypto funds

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Bitcoin has risen around 1,000% in the last year

  • The bitcoin price rose sharply overnight to close to $60,000 before slipping back to around $58,000.
  • The Fed stressed it would keep monetary policy loose, while stimulus checks are being sent out.
  • Morgan Stanley plans to give its rich clients access to bitcoin as institutional interest grows.
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Bitcoin flirted with the $60,000 barrier again on Thursday after a sharp fall from record highs earlier in the week, with stimulus and institutional interest boosting the world’s biggest cryptocurrency.

The bitcoin price (BTC) was up 5.3% to $57,874 at 10.30 a.m. EDT, having earlier topped $59,500.

That was off a high of close to $62,000 touched on Saturday, but well up from a low of below $54,000 hit on Tuesday. Bitcoin has risen around 1,000% in a year.

Ethereum’s cryptocurrency ether (ETH) rose to $1,850 on Thursday before slipping back to around $1,790, up 1% for the day.

Edward Moya, senior market analyst at Oanda, said Wednesday’s Federal Reserve statement had helped the bitcoin price.

The Fed said it planned to keep supporting the economy until employment and inflation picked up and foresaw no interest-rate rises until 2024.

Huge amounts of stimulus have been a key driver of the bitcoin boom, and “an accommodative Fed until the job is done should keep the world’s largest cryptocurrency strongly supported,” Moya said.

Justin d’Anethan, head of exchange sales at Diginex, said stimulus checks being sent out to Americans was another factor.

More interest from big institutions also appeared to lift the coin, with Morgan Stanley planning to offer its rich clients access to bitcoin funds, according to CNBC.

D’Anethan said: “It seems that people are buying globally, nudged by Meitu, a Hong Kong listed company, buying yet another $50 million worth of crypto and, overnight, the news that Morgan Stanley will enable its wealthier clients to access BTC funds.”

Adrian Patten, chair of currency infrastructure-provider Cobalt, said: “With such high prices, both liquidity and volumes are increasing and catching up with the more traditional asset classes.”

Other market participants are more skeptical, however, with Bank of America saying on Wednesday that bitcoin does not provide diversification or inflation protection.

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Bitcoin rises 6% to flirt with $60,000 after Fed keeps policy steady and Morgan Stanley offers crypto funds

GettyImages 1231620194
Bitcoin climbed on Thursday morning

  • The bitcoin price rose sharply overnight to close to $60,000 before slipping back to around $58,300.
  • The Fed stressed it would keep monetary policy loose, while stimulus checks are being sent out.
  • Morgan Stanley plans to give its rich clients access to bitcoin as institutional interest grows.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin flirted with the $60,000 barrier again on Thursday after a sharp fall from record highs earlier in the week, with stimulus and institutional interest boosting the world’s biggest cryptocurrency.

The bitcoin price (BTC) was up 6.3% to $58,280 at 7.20 a.m. EDT, having earlier topped $59,500.

That was off a high of close to $62,000 touched on Saturday, but well up from a low of below $54,000 hit on Tuesday. Bitcoin has risen more than 1,000% in a year.

Ethereum’s cryptocurrency ether (ETH) rose to $1,850 on Thursday before slipping back to around $1,810.

Edward Moya, senior market analyst at Oanda, said Wednesday’s Federal Reserve statement had helped the cryptocurrency market.

The Fed said it planned to keep supporting the economy until employment and inflation picked up and foresaw no interest-rate rises until 2024.

Huge amounts of stimulus have been a key driver of the bitcoin boom, and “an accommodative Fed until the job is done should keep the world’s largest cryptocurrency strongly supported,” Moya said.

Justin d’Anethan, head of exchange sales at Diginex, said stimulus checks being sent out to Americans was another factor.

More interest from big institutions also appeared to lift the coin, with Morgan Stanley planning to offer its rich clients access to bitcoin funds, according to CNBC.

D’Anethan said: “It seems that people are buying globally, nudged by Meitu, a Hong Kong listed company, buying yet another $50 million worth of crypto and, overnight, the news that Morgan Stanley will enable its wealthier clients to access BTC funds.”

Adrian Patten, chair of currency infrastructure-provider Cobalt, said: “With such high prices, both liquidity and volumes are increasing and catching up with the more traditional asset classes.”

Other market participants are more skeptical, however, with Bank of America saying on Wednesday that bitcoin does not provide diversification or inflation protection.

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78% of institutional investors are not planning on investing in cryptocurrencies, though a majority say crypto is ‘here to stay,’ JPMorgan survey finds

Bitcoin generic images
  • A JPMorgan survey of 3,400 institutional investors shows a majority do not plan to invest in or trade cryptocurrencies. 
  • However, 58% of investors surveyed said cryptocurrencies are “here to stay.”
  • The survey is the latest look into institutional sentiment on cryptos as more firms enter into the space.
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An overwhelming majority of institutional investors surveyed by JPMorgan said they do not plan to start investing or trading cryptocurrencies, though 58% said crypto is “here to stay.”

In a survey of roughly 3,400 investors representing 1,500 institutions around the work, 11% of investors said their firm either trades or invests in crypto, while 89% said their firm doesn’t.

Out of the investors who answered “no,” 78% of investors said it’s “not likely” their firm will trade or invest in crypto, while 22% answered “likely.”

The survey sheds a light on the state of institutional investor interest in cryptocurrencies. While bitcoin’s parabolic rise has garnered the attention of institutional and retail investors alike, the institutional community remains somewhat divided on the future of crypto. 

When asked: “What is your opinion on Crypto?” 14% answered “probably rat position squared (something to avoid,)” while 7% said it “will become one of the most important assets.” 58% of investors said it’s “here to stay,” and 21% answered that crypto is just a “temporary fad.” 

Almost all investors (98%) said they believe fraud in the crypto world is “somewhat” or “very much prevalent.” 

Multiple well-known Wall Street behemoths are taking in interest in cryptocurrencies and bitcoin. Most recently, a unit of Morgan Stanley said it’s exploring whether to invest in cryptocurrencies, according to Bloomberg. Morgan Stanley also has a 10.9% stake in MicroStrategy, which gives the bank indirect exposure to 7,681 bitcoin. 

BlackRock has authorized two of its funds to invest in bitcoin futures, while JPMorgan strategists have a theoretical price target of $146,000 for bitcoin.

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