Bitcoin ETF: Three Reasons Morgan Stanley’s MSBT Could Overtake BlackRock’s IBIT BTC ETF

Quick Read

• MSBT charges 0.14%, the lowest fee of any spot Bitcoin ETF on the market, while IBIT charges 0.25%. The 11 basis-point gap The 11-basis-point gap (0.11%) between MSBT and IBIT saves $1.1 million a year for every $1 billion invested, which is meaningful enough to influence where big institutional money goes.

• Morgan Stanley is the first major US bank to issue a spot Bitcoin ETF under its own name, which gives MSBT the institutional reputation to match that of BlackRock.

• It could take years for MSBT to catch IBIT, as the latter manages $63 billion in assets, which is around 330 times more than MSBT. IBIT is also the most-traded Bitcoin ETF and dominates options.

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For two years, the question of who runs the spot Bitcoin (CRYPTO: BTC) ETF market wasn’t really a thing anyone needed to ask, with BlackRock’s IBIT miles ahead of the rest. IBIT pulled in tens of billions, dominated daily BTC ETF trading volume, and built a 45-49% market share that nobody else came close to. The other ETF issuers, including Fidelity, Grayscale, Bitwise, and ARK 21Shares, shared the rest of the spoils.

However, Morgan Stanley launched MSBT in early April, making it the first spot Bitcoin ETF from a major US bank, with the lowest fee in the market at 0.14%. The fund has already drawn $153 million in AUM. BlackRock’s IBIT is still the giant at $55 billion, but for the first time, it has a worthy rival with the distribution, brand, and pricing to challenge it.

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Can Morgan Stanley’s MSBT actually overtake BlackRock’s IBIT as the number one Bitcoin ETF? Here are three reasons we think MSBT could surpass IBIT.

Reason 1: MSBT Has the Lowest Fee in the Bitcoin ETF Market

For most retail investors, the fee gap between MSBT and IBIT seems meaningless. On a $10,000 Bitcoin ETF position, MSBT’s 0.14% fee versus IBIT’s 0.25% works out to roughly $11 a year—and nobody is switching ETFs to save $11.

However, MSBT is not really competing for $10,000 retail accounts. The fund is competing for the institutional allocations that move billions. A pension fund deploying $100 million into Bitcoin saves $110,000 a year by holding MSBT instead of IBIT. And a sovereign wealth fund or asset manager allocating $1 billion saves about $1.1 million annually—real money that institutional investors don’t leave on the table.

Before MSBT, most spot Bitcoin ETFs were charging between 0.19% and 0.25%, with only Grayscale’s Bitcoin Mini Trust at 0.15% being the cheapest. Then MSBT launched at 0.14%, undercutting the cheapest competitor by a full basis point (0.01%) and setting a new low for the entire market.

BlackRock has not cut IBIT’s 0.25% fee in response, leaving Morgan Stanley with a real cost advantage that big institutional money pays attention to.

Reason 2: MSBT’s Launch Momentum Is Among the Strongest of Any ETF Morgan Stanley Has Run

MSBT broke a record at Morgan Stanley on its first day of trading. The fund pulled in $34 million on day one and processed 1.6 million shares, making it the strongest opening day of any ETF Morgan Stanley has ever launched across all its asset classes.

Meanwhile, the launch happened in a brutal market environment. Bitcoin was trading around $70,000 with crypto sentiment at multi-month lows, and MSBT entered a crowded field of existing spot Bitcoin ETFs.

Bloomberg’s Eric Balchunas ranked the debut in the top 1% of all ETF launches and called it arguably the biggest bitcoin ETF launch since they began. By day six, MSBT had pulled in over $100 million—more than WisdomTree’s spot BTC ETF had accumulated in over two years.

Notably, all of this happened with Morgan Stanley’s full advisor network still warming up. The bank has 16,000 financial advisors managing roughly $6.2 trillion in client assets, but advisors don’t move clients’ money into a new fund overnight.

Even if just 2% of money across Morgan Stanley’s client base went into Bitcoin ETFs, that could drive tens to hundreds of billions in demand—inflows that would make MSBT a real threat to IBIT’s lead. MSBT’s $192 million in AUM after just over two weeks is just the early start of an advisor network that hasn’t fully turned on yet.

Reason 3: Morgan Stanley’s Reputation Is the Only One That Can Match BlackRock’s

The existing Bitcoin ETF field splits into two camps. On one side, asset managers like Fidelity, Invesco, VanEck, WisdomTree, and Franklin Templeton are respected names, but they’re known mostly inside the ETF and mutual fund world.

On the other hand, crypto-native firms like Bitwise, ARK 21Shares, and Grayscale are credible with crypto investors but don’t carry the same trust without the institutional wealth management standing. None of them carry the decades of trust BlackRock built up with pensions, sovereign wealth funds, and corporate treasuries.

However, Morgan Stanley is the first major US bank to issue a spot Bitcoin ETF under its own name, which puts it in a separate category compared to other existing issuers. Banks earn trust differently from asset managers, as they manage wealth across generations, hold long-standing client relationships, and have brand weight in rooms where firms like Fidelity or Bitwise don’t show up.

Morgan Stanley’s brand is also ranked #199 in the Global Top 1000 Brands list, while BlackRock comes in at #602. And such a gap could be vital when a big institution is choosing where to put hundreds of millions into Bitcoin.

So, Morgan Stanley matches IBIT on reputation, and that removes BlackRock’s biggest advantage. For two years, the case for IBIT was simple—a trusted name, easy to trade in big sizes, and the lowest reasonable fee. The other issuers couldn’t match IBIT in any of those cases. Now, Morgan Stanley can do just that with the same big-investor credibility, a lower fee, and a wealth network that gets new money into MSBT before it ever sees IBIT.

What MSBT Still Has to Overcome to Catch IBIT

The size gap between MSBT and IBIT is enormous. IBIT manages around $63 billion in assets, which is roughly 330 times what MSBT has accumulated in its first two and a half weeks. IBIT is also the most-traded Bitcoin ETF in the market, with about 70% of all U.S. spot Bitcoin ETF trading volume and lower trading costs for active traders.

Bloomberg’s James Seyffart put it bluntly: “IBIT is the most liquid ETF for trading and in the options market and it’s unlikely MSBT will ever compete with that. At least not anytime remotely soon.”

The options market is also where IBIT’s lead is hardest to break. IBIT was the first spot Bitcoin ETF approved for options trading in late 2024, and its options open interest just passed Deribit’s—the offshore venue that has run the Bitcoin options market since 2016. Once big traders build their positions around a venue, they don’t easily move them. MSBT doesn’t have an options market yet, and even if it gets one approved, it would still take years for that market to mature.

Bloomberg’s Eric Balchunas projects MSBT could reach $5 billion in AUM in its first year — a strong launch by any standard, but still less than 10% of where IBIT is right now. Catching IBIT will take years of advisors continuing to push MSBT and BlackRock not defending its liquidity and options lead—and that doesn’t seem realistic, at least for now.

Can MSBT Actually Take the Number 1 Bitcoin ETF Spot?

MSBT has the strongest setup of any Bitcoin ETF challenger IBIT has faced, but flipping BlackRock’s lead will take years. Morgan Stanley is building a complete crypto setup, with Bitcoin, Ethereum, and Solana ETFs, and retail crypto trading on E*Trade for 5.2 million users.

There’s also a National Trust Bank Charter under OCC review for custody and staking, and a wealth management network already moving clients into Bitcoin investments. Every layer of that buildout adds another entry point that funnels client capital into MSBT first.

Over the next 12 months, three things could decide which way this goes. MSBT’s Q1 2027 inflow numbers will reveal whether advisors are actually moving client money in, or whether the launch hype was front-loaded.

Then the Ethereum and Solana trust approvals will signal whether Morgan Stanley’s bank-led approach gets repeated across crypto, which would expand its lead. And BlackRock’s response will matter most. If IBIT cuts its fee, Morgan Stanley will lose its clearest advantage. None of these are guaranteed, but if MSBT keeps pulling in money while BlackRock holds its fees, the gap will close faster than most expect.

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