Bitcoin ETFs’ $7.6bn record lures brokers as Morgan Stanley circles: ‘Demand like this they gonna have to expedite’

“Mega brokers” like Morgan Stanley are under pressure to add spot Bitcoin exchange-traded funds to brokerage platforms amid bumper trading activity.

“Pressure is mounting” on big US investment firms as demand for Bitcoin ETFs shows no signs of dropping off, Eric Balchunas a senior ETF analyst at Bloomberg Intelligence, tweeted Wednesday.

“Imagine being [a] Morgan adviser and your client wants IBIT and you have to be like ‘I don’t have access to it, my mommy (the platform gatekeeper) won’t allow it.’ That’s gotta be embarrassing,” he said.

IBIT is the ticker symbol for BlackRock’s spot Bitcoin ETF.

US-based Bitcoin ETFs set a new record for daily trading volumes on Wednesday, with more than $7.6 billion in activity, according to Bloomberg data. Wednesday’s volume far exceeds the previous record of $4.6 billion record, set on January 11.

Investment platforms like Morgan Stanley, UBS, and Merrill Lynch are currently mulling over whether or not to add spot Bitcoin ETFs, Balchunas said.

A source close to UBS told DL News in January that only select clients were being given access to a limited number of Bitcoin ETFs. UBS advisors weren’t allowed to solicit clients though, meaning only customers who specifically requested investments in these ETFs could get access.

“They like to see track record and get paid off, but with grassroots demand like this they gonna have to expedite,” he tweeted.

Morgan Stanley is reportedly mulling the decision to add the ETFs to its brokerage platform, CoinDesk reported Wednesday. The investment bank did not immediately respond to request for comment from DL News.

The surge in trading came as Bitcoin broke the $63,000 barrier on Wednesday, trading at levels not seen since late 2021.

BlackRock leads the pack

BlackRock’s fund led the surge pack with more than $3.3 billion in volume, which translated to $612 million of inflows into the fund.

Grayscale and Fidelity’s ETFs reported volumes of approximately $1.8 billion and $1.4 billion, respectively. Despite the high volumes Grayscale’s ETF clocked another day of outflows, with $216 million leaving the fund.

Most market makers “say this volume is largely [a] function of natural demand vs [algorithmic and arbitrage] type volume,” Balchunas wrote.

Arbitrage refers to a strategy deployed by traders to profit from price differences in similar assets.

Simply put, they try to exploit price differences between markets, buying in one market where the price is lower and simultaneously selling in another where the price is higher, profiting on the discrepancy.

Balchunas called the surge in trading volumes “officially a craze” in a separate post earlier in the day.

The analyst noted nine of the ETFs, excluding Grayscale, had already beaten a previous day-one record of $2.6 billion, halfway through Wednesday’s trading session.

“These numbers are absurd, highly rare stuff here,” Balchunas wrote.

Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.