Morgan Stanley is now considering Bitcoin as a new institutional asset class. The information was released in a recent report made by the research division of the company. The topic of the report was related to the status of Bitcoin, Blockchain technology and cryptocurrencies in general.
Bitcoin is an Institutional Asset Class
In a report titled “Update: Bitcoin, Cryptocurrencies and Blockchain” Morgan Stanley updates an older report released in December 2017. According to the report, Bitcoin has been changing its thesis during the last years. Between 2017 and 2018, the popular virtual currency registered many different changes.
Bitcoin became a store of value in 2017, a thesis that remains valid in the community. As a deflationary asset, an increasing demand would generate pressure on its price. During 2018, several fiat currencies experienced different problems. In Turkey and Argentina, the local fiat currencies abruptly depreciated against the US dollar. Investors decided to move towards Bitcoin and embrace it as new refugee against these devaluations.
Perhaps one of the most interesting things is related to the fact that Bitcoin is now considered a new institutional investment class. There are several platforms that are starting to create institutional-grade crypto solutions. The Intercontinental Exchange (ICE) or Fidelity Investments are just an example of this. These two companies are working to offer new platforms for institutions.
The report also talks about stablecoins, Initial Coin Offerings (ICOs), institutional investments and more. About stablecoins, the report says that not all stablecoins will survive. For Morgan Stanley, those that have higher chances to prosper are the ones with lower transaction costs and highest liquidity.
The ICO section looks not so bullish as the others. Indeed, the money raised by ICOs has been decreasing during the whole year. As per Morgan Stanley, the next development to watch is related to security token offerings and regulated ICOs. The report shows that 64% of ICOs has failed during the first year.
Clearly, institutions are paying more attention to Bitcoin and virtual currencies. Not only because of the Bakkt platform, but also because in 2019, a Bitcoin exchange-traded fund (ETF) could be approved by the U.S. Securities and Exchange Commission (SEC). If this happens, wealthy and institutional investors will be able to have access to the crypto market.
Morgan Stanley marks how this cryptocurrency is evolving and becoming more mature as time passes. With proper regulations and infrastructure, Bitcoin could be added to new portfolios around the world.
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