Morgan Stanley Takes Aim at IBIT With Cheapest Bitcoin ETF Yet

Today, Morgan Stanley entered the increasingly crowded spot bitcoin ETF market with the launch of the Morgan Stanley Bitcoin Trust (MSBT).

The new fund comes in with an expense ratio of 0.14%, narrowly undercutting the current low-cost leader, the Grayscale Bitcoin Mini Trust ETF (BTC) at 0.15%. It’s also 11 basis points cheaper than the iShares Bitcoin Trust (IBIT), the dominant player in the category with $53.8 billion in assets.

BTC, with $3.6 billion in assets, has shown that price matters. Its low fee has helped it attract cost-conscious investors, though flows still lag far behind IBIT. So far this year, IBIT has pulled in $1.2 billion compared to $272 million for BTC, underscoring that scale, liquidity, and brand still carry a lot of weight.

Morgan Stanley is betting it can compete on both fronts. With a rock-bottom fee and one of the largest wealth management distribution networks in the world, MSBT could quickly gather assets. The launch also raises the possibility of fee cuts from rival bitcoin ETFs looking to stay competitive.

For investors, the fee difference is real but modest. An 11 basis point gap amounts to about $11 per year on a $10,000 investment. Over long holding periods, that can add up, especially for large allocations. But for shorter-term investors, or those prioritizing liquidity and scale, the difference is less meaningful.

MSBT has both price and distribution working in its favor, but IBIT’s early lead won’t be easy to overcome.