Morgan Stanley reported a mixed second quarter for its crypto investment products: strong share creations into its own spot Bitcoin ETF but a decline in net assets driven by Bitcoin's falling price. According to the first quarterly filing for the Morgan Stanley Bitcoin Trust (MSBT), the fund recorded a $66.8 million decrease in net assets from operations during its first 85 days, even as it brought in $371.1 million in gross share contributions and paid only $5.26 million in redemption distributions from April 7 through June 30.
Unrealized Bitcoin depreciation accounted for $66.17 million, or nearly 99%, of the operating-period decrease. The trust also recorded $618,611 in realized Bitcoin losses and $72,288 in sponsor fees. MSBT's net asset value per share fell 14.01%, from $19.70 to $16.94, while its disclosed CoinDesk Bitcoin benchmark declined 13.98%. At quarter-end, the trust held 5,059.3077 BTC with a $365.18 million cost basis and a fair value of $299 million, based on a Bitcoin price of $59,101.49.
MSBT issued 17.9 million shares and redeemed 250,000 during the reporting period, ending June with 17.65 million shares outstanding. The fund completed its first trading month without daily redemptions; the 25 later redemption baskets ended that streak but remained small relative to gross creations. By July 31, shares outstanding had risen to 21.74 million, up 4.09 million, or 23.17%, from June 30, confirming net creation activity continued after the quarter ended.
In a separate 13F filing with the SEC, Morgan Stanley disclosed it increased its position in BlackRock’s iShares Bitcoin Trust (IBIT) by roughly 23% to 16.5 million shares, up from 13.4 million shares, while also holding 2.57 million shares of its own MSBT valued at about $43.3 million. On the Ethereum side, the bank raised its BlackRock ETHA stake by approximately 202% to 4.6 million shares and raised its Grayscale Ethereum Trust holdings by around 26% to 5.1 million shares.
At the same time, Morgan Stanley cut its Coinbase position by about 550,000 shares, reduced its CleanSpark holdings by more than 3.1 million shares, and fully exited its Bitfarms position of roughly eight million shares. The shift suggests the bank favors direct digital asset exposure through regulated ETFs over equity stakes in crypto-related companies.
