Morgan Stanley Shows Up Two Years Late to the Bitcoin ETF Party, Still Manages to Grab a Seat

Morgan Stanley's Bitcoin Trust (MSBT) debuted with a respectable $30.6 million in first-day inflows, landing in second place behind BlackRock's IBIT as US spot Bitcoin ETFs recorded net outflows on Wednesday. Better late than never, I suppose—though "late" here means showing up to a party two years after the champagne ran out and everyone's already doing shots of regret.

The MSBT, the first spot Bitcoin ETF offered by a US bank, started trading on the NYSE Arca and generated $34 million in trading volume—slightly above Bloomberg ETF analyst Eric Balchunas' prediction of $30 million. Balchunas, to his credit, managed to nail the estimate without the help of a Magic 8 Ball or a particularly adventurous oracle.

As of April 8, MSBT held 444.4 BTC, worth around $31.7 million, representing roughly 0.03% of the estimated 1.29 million BTC collectively held by US spot BTC ETFs. With the lowest fee among its peers, Morgan Stanley's ETF trailed only BlackRock's iShares Bitcoin Trust (IBIT), which saw $40 million in inflows on the same day. For those doing the math at home, that's roughly the GDP of a small island nation—if that island nation runs entirely on Lightning Network.

Despite the solid debut, MSBT arrived nearly two years after the January 2024 launch wave that set a much higher bar. GBTC and IBIT handled $2.3 billion and $1 billion in opening day volume back then, with IBIT pulling about $112 million in inflows and GBTC recording $95 million in outflows on their first days. Imagine showing up to a reunion and finding out everyone already compared portfolio sizes and you're the last one asked to share.

The inflows for IBIT and MSBT weren't enough to offset selling from other funds. Fidelity Wise Origin Bitcoin Fund (FBTC) saw $79 million in outflows, while ARK 21Shares Bitcoin ETF (ARKB) lost about $75 million. Grayscale Bitcoin Trust ETF (GBTC) added another $11 million in redemptions, bringing total daily outflows to $124.5 million. That's a lot of red candles for a Wednesday—someone's portfolio is definitely having a bad hair day.

This marked two consecutive days of selling, following Tuesday's $159 million in outflows, after the funds recorded $471 million in inflows on Monday—the largest daily inflows since late February. Momentum is a funny thing in this market—it's like trying to hold onto smoke, except the smoke costs $60,000 and occasionally gives you a panic attack.