Morgan Stanley Says Crypto ETPs Continue to Grow Despite Bear Market
The market for cryptocurrency exchange products continues to grow, a sign that institutional interest in the digital assets sector remains strong despite concerns of a crypto winter, according to Wall Street giant Morgan Stanley (MS).
There are more than 180 active crypto exchange-traded-funds (ETFs), exchange-traded-products (ETPs) and trusts. Half of these products have launched since the “bitcoin bear market,” despite total assets dropping 70% to $24 billion from $84 billion, Morgan Stanley said in a research report on Thursday.
“The crypto exchange products market will continue to grow,” the report said, adding that the “bear market hasn’t deterred asset managers and financial companies from launching ways for their clients to get access to digital assets.” Fund launches accelerated in 2022 despite the decline in crypto prices, with eight new ETP launches per month on average in the last year.
Crypto ETPs are traded on exchange, much like equities, and track the performance of an underlying asset. Their popularity has been growing as they allow clients to invest in cryptocurrencies without having to invest in the underlying digital asset themselves.
In the U.S., WisdomTree (WETF) is the only publicly traded “pure-play ETF issuer,” the note said, and while it manages less than 1% of the total crypto ETP universe its market share of flows is 5%, and the “scale of its offering is well ahead of traditional asset manager peers.”
Morgan Stanley expects more crypto exchange-traded products to be launched around the world in the coming quarters, and while the focus will remain on bitcoin (BTC), new products will likely cover a large number of crypto assets and themes, it said.