Morgan Stanley has acquired $188 million in Bitcoin exchange-traded funds (ETFs), signaling continued institutional interest in the digital asset. The purchase underscores the growing adoption of Bitcoin by traditional financial institutions, which are increasingly allocating portions of their portfolios to cryptocurrencies. According to recent market data, U.S.-based spot Bitcoin ETFs and exchange-traded products (ETPs) now hold nearly 1.5 million BTC, representing 7% of the maximum Bitcoin supply. BlackRock’s iShares Bitcoin Trust (IBIT) remains the largest holder among U.S. ETFs, with 746,810 BTC in its portfolio as of late August 2025. Fidelity’s FBTC and Grayscale’s GBTC followed with 199,497 BTC and 178,728 BTC, respectively [1].
The recent investment by Morgan Stanley is part of a broader trend where major financial players are diversifying into digital assets. The U.S. remains the dominant market in Bitcoin ETF holdings, with its products collectively accounting for 87.56% of all BTC held by ETPs. The U.S. dominance is further illustrated by the fact that the top ten spot Bitcoin ETPs by assets under management are primarily concentrated in U.S. products. The country’s spot ETFs now account for six of the top ten positions in terms of BTC holdings, with VanEck’s HODL being the only non-U.S. product to rank in the top ten [1].
However, the demand for Bitcoin ETFs has shown signs of fluctuation. In late August 2025, U.S. spot Bitcoin ETFs experienced their first weekly outflow since June, with a net redemption of $126.64 million. This marked a shift from the six-week streak of inflows, raising concerns about potential investor caution amid broader market corrections. BlackRock’s IBIT bucked the trend with a $24.63 million inflow, while Fidelity’s FBTC saw the largest outflow of $66.2 million. Grayscale’s GBTC also continued to lose capital, shedding an additional $15.3 million [2].
The recent outflows contrast with the strong cumulative inflows since the launch of U.S. Bitcoin ETFs in January 2024, which totaled $54.24 billion. Despite the August drawdowns, Bitcoin ETFs still hold a significant portion of the total market capitalization of Bitcoin, with their assets under management representing 6.52% of the asset’s value. Analysts suggest the recent outflows may reflect profit-taking and broader market corrections following a summer rally [2].
In parallel, Ethereum ETFs have outperformed Bitcoin products in recent weeks, with nearly $4 billion in inflows in August. Ethereum-based products attracted $3.96 billion in net inflows during the same period, while Bitcoin ETFs recorded $622.5 million in net outflows. This divergence highlights the shifting dynamics in the crypto market, where investors are rotating toward alternative assets such as Ether, particularly as Bitcoin ETFs face regulatory and market volatility [2].
The regulatory environment for digital assets in the U.S. is also evolving, with recent legislative efforts aiming to provide clearer frameworks for crypto products. The passage of the CLARITY Act in the House of Representatives in July 2025 laid the groundwork for a more structured regulatory approach, dividing digital assets into securities and commodities. The bill aims to establish jurisdictional clarity between the SEC and CFTC while promoting innovation in the space. These developments are expected to accelerate the approval of new crypto ETFs, further expanding institutional access to digital assets [3].
Source:
[1] BlackRock leads US ETFs dominance as ETPs corner 7% … (https://www.mitrade.com/insights/news/live-news/article-3-1088425-20250902)
[2] Bitcoin ETFs Bleed $126.7M in First Weekly Outflows Since June (https://finance.yahoo.com/news/bitcoin-etfs-bleed-126-7m-125500539.html)
[3] Fast-Tracking Digital Asset ETFs – Galaxy (https://www.galaxy.com/insights/research/digital-asset-etfs-fast-track-sec-approval)
