Crypto market weakens as retail-heavy Bitcoin ETFs face losses and $600B cap drop.
Morgan Stanley filed for spot Ethereum exchange-traded funds (ETFs) on Wednesday, becoming the latest American bank to do so. The move is designed to track ETH’s price while passing staking rewards through to shareholders.
The news comes just days after Bank of America also expanded client access to crypto amid rising institutional demand.
In addition to Ethereum, Morgan Stanley also submitted ETF applications linked to Bitcoin and Solana on Tuesday.
A relatively late entrant to the crypto space, the bank’s move represents its first involvement in this segment of the ETF market. The announcement arrived about two years after crypto-focused ETFs in the US started to proliferate.
Morgan Stanley’s S-1 filing marks a significant step in integrating cryptocurrency within traditional finance. Managing $1.6 trillion in assets, the bank is broadening client exposure to crypto via regulated investment products.
The submission reflects a broader shift among established Wall Street institutions toward greater involvement in digital assets.
On Monday, BeInCrypto reported that Bank of America began authorizing wealth management advisors to recommend a portfolio allocation of 1% to 4% in cryptocurrency.
Before that, firms including BlackRock, Fidelity, Goldman Sachs, JPMorgan Chase, and Citigroup also launched trading operations and tokenization services.
While banks appear increasingly driven by a fear of missing out on crypto-related opportunities, the broader market has been underperforming, particularly in recent months.
While Morgan Stanley’s endorsement supports broader mainstream acceptance, it arrives during a period of heightened volatility.
Most spot Bitcoin ETF assets remain concentrated among retail investors, many of whom have faced recent losses.
This environment has accelerated a shift toward professional holders, with institutional ownership rising from 20% to 28%, reflecting a gradual rebalancing of market participation.
At the same time, the broader crypto market has shed roughly $600 billion in Bitcoin market capitalization since October. Small-cap indices have fallen to levels last seen in November 2020, while newly launched altcoin ETFs have quickly slipped into negative territory.
Further uncertainty looms as US President Donald Trump is expected to announce his nominee for Federal Reserve Chair as soon as Friday.
Kevin Hassett has emerged as a leading contender to replace Jerome Powell. If he is appointed, markets will anticipate a more dovish monetary stance.
