Dispatch #27: Morgan Stanley Bets Wealthy Clients Want Bitcoin

In this patch of your weekly Dispatch:

• Morgan Stanley becomes the first big bank to offer Bitcoin to wealthy clients
• Meet the public software company with $50M of ETH on its books
• 40% of Americans want to put some of their stimulus money into BTC and stocks

The Big Idea

Morgan Stanley Opens Access to Three Bitcoin Funds

Last week we shared our thesis that we were seeing the beginning of the “next institutional wave” coming to Bitcoin. Right on cue, this week we’ve learned that Morgan Stanley is poised to open up access to not just one but three institutional BTC funds for its wealth management clients.

Now, access to these funds will be restricted. Individuals must hold $2М with the bank while investment firms must hold $5М. What’s more, Morgan Stanley is capping client Bitcoin investments at 2.5% of net worth.

On the flipside, these funds offer real Bitcoin exposure – not just the sort of public market versions of crypto we’ve seen before. It’s clear then that Morgan Stanley is seeing enough demand from clients to put their $4T AUM reputation on the line.

The funds are managed by Galaxy Digital, FS Investments, and NYDIG and will open next month after Morgan Stanley’s financial advisors get training on the new product.

This section was supposed to end here but then, early on Friday, reports emerged that Morgan Stanley was in talks to acquire a significant stake in leading South Korean crypto exchange Bithumb.

Slowly but surely Bitcoin is getting Wall-Street mainstream.

The Latest In…

Stimmy Power!

The US stimulus is passed, and that means about $400B smackers are going to be finding their way to Americans’ accounts. The crypto community is obviously wondering how much of that is going to end up pumping prices. According to a survey released this week by Mizuho Securities, two in five Americans are looking to put some of their money into stocks and Bitcoin (with Bitcoin being significantly preferred to stocks) and overall 10% – or $40B – could find its way over.

The Latest In…

Altcoins

Honestly, it was kind of a big week for alts. Headlining the news was the announcement that Grayscale would be opening trusts for five new coins:

• $BAT (Basic Attention Token)
• $LINK (Chainlink)
• $MANA (Decentraland)
• $LPT (Livepeer)
• $FILE (Filecoin)

On top of that, the NEXO Token hit a fresh new all-time high of $2.80 and Coinbase announced that ADA (Cardano) was coming to its Pro platform. We don’t use the world Altszn, but its not looking bad out there for an alt.

The Latest In…

Ethereum

We’ve frequently discussed Bitcoin treasury holdings in this newsletter. It has been one of the defining trends of crypto markets over the last six months. This has caused many to speculate if Ethereum would follow. For at least one public company, the answer is yes. Meitu is a Hong Kong-listed software company that has just completed its second purchase of both BTC and ETH as treasury assets. In total, the firm now holds $39.5M in BTC and $50.4M in ETH. Put that in your store of value pipe and smoke it.

The Latest In…

NFTs

When Beeple shocked the world with a $69M auction with Christie’s, you know that auction house’s great competitor Sotheby’s couldn’t be far behind. This week, they announced a partnership that would bring the works of digital artist Pak to market. In addition to the specific art for sales, the CEO of Sotheby’s has been all over TV talking about other ways they want to integrate crypto – including letting people pay and be paid with cryptocurrency. Seems like we’re just at the beginning of the traditional collecting world’s overlap with this industry.

The Week’s Most Interesting Data Story

How Bitcoin Reacted to Powell In Real Time

As more and more of the Wall Street set has gotten into crypto, one of the commonly asked questions has been: is Bitcoin going to start acting more like other macro assets – i.e. respond to short-term macro happenings, like a Fed Chair press conference? While one event doesn’t make a trend, it is pretty interesting to see how Bitcoin responded to Jerome Powell’s comments around this week’s Fed meeting. That meeting reaffirmed the Federal Reserve’s commitment to low interest rates and sustained asset purchases, and so was seen as generally good for financial assets and especially good for assets that might hedge against the inflation that the Fed clearly isn’t worried about.

Hot Topics

What the Community Is Discussing

More information in a convenient Twitter thread form about institutional fund flows (and how they compare to retail).

Crazy retail volume in some parts of the world.

This is a really important message for the community to share.

Our Take

@AntoniNexo This Week

• On Tuesday, Antoni joined CNBC anchors Hadley Gamble and Matthew Taylor to talk Bitcoin’s latest $61.8K all-time high, the subsequent dip, and a not-at-all-unlikely hike up to $100K by end of year. If you only want one takeaway from the interview, it’s Antoni’s response to Gamble comparing Bitcoin to a “bad boyfriend” who’s hot and then cold: “The important thing is that Bitcoin’s heart is in the right place.”
• Joining SEC Commissioner Hester Peirce, aka Crypto Mom, for a quick CoinDesk First Mover episode, Antoni said that “everything is lined up to Bitcoin’s benefit,” referring to the Fed’s announcement that it was not planning to slow down dollar printing. What about price predictions? “We do see the retail come in more aggressively on the Nexo platform”, Antoni explained, noting that the market action around 75K per BTC will be indicative of what the level of leverage in the system is – always an indicator of market tops.

What to Watch for Next Week:

• Will retail try to front-run the big fish coming in via Morgan Stanley?
• How much of the stimulus money will actually go to investing?
• Is Elon selling that song about NFTs as an NFT or not?