Morgan Stanley Sees Cryptocurrencies on Path to Investable Asset Class

The Wall Street firm sees signs of maturation especially given its resiliency since the height of the pandemic.

Mar 17, 2021 at 4:40 p.m. UTC
Updated Sep 14, 2021 at 12:28 p.m. UTC

Morgan Stanley’s wealth management unit on Wednesday published a research report arguing the “threshold is being reached” for cryptocurrency to become an investable asset class.

The document was published as CNBC reported the Wall Street firm is also launching access to three funds that enable bitcoin (BTC) ownership.

  • “A firming regulatory framework, deepening liquidity, availability of products and growing investor interest ­– especially among institutional investors – have coalesced … at a time when the challenges to conventional cash/stock/bond diversification are rising,” according to the Morgan Stanley report.
  • "Our approach to cryptocurrency as an asset class should not be misconstrued for endorsement of any particular coin ownership. To the contrary, we see direct coin ownership, whether through private closed brokerages or cash app services, as still being in its infancy, with many questions yet to be answered about the achievability of low-cost best execution, central clearing, accurate and timely market data, and transparent and integrated custodial services."
  • “It was not until the 2020 COVID-19 pandemic that cryptocurrency’s viability as a financial investment option for qualified investors was cemented,” according to the report.
  • Morgan Stanley published a simulation of adding a 2.5% allocation to bitcoin in a traditional portfolio consisting of 60% equities and 40% bonds, with monthly rebalancing. Results showed improved annualized returns by 164 basis points (1.64 percentage points) in five of the past seven years, without significantly increasing volatility.
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