Morgan Stanley, Ondo Finance, Pomp, and Fidelity

Morgan Stanley has ~15,000 wealth advisors who manage money for their clients. Their clients are typically affluent to ultra-high-net-worth individuals ($250k-$10m+ in investable assets). This nets out to their advisors overseeing ~$7T in client assets across their wealth management arm. In October, their Global Investment Committee recommended a 2-4% crypto allocation.

So, you can see how this plays out — there is the potential for $100 billion+ in additional buy pressure coming from the Bitcoin ETFs over the next few years as advisors recommend a 2-4% BTC allocation to their $7 trillion capital base. Plus, Morgan Stanley recently launched their own Bitcoin ETF — so they get to capture some of the fees from these allocations. This is very healthy for the Bitcoin network as it diversifies the investor base across sticky, professional capital.

In the short term, a lot of the headlines of big banks recommending a small allocation to bitcoin/crypto will center on directing their advisors to allocate to their BTC ETF.

But over time, I think this gets even more interesting when Morgan Stanley recommends approved third-party crypto funds as an alternative investment allocation to their more sophisticated clients (alongside hedge funds, private equity, private credit, and real estate). Once advisors get comfortable with the Bitcoin ETF, I can see additional allocations to alternative investments that focus on Bitcoin-related financial products.

Ondo is capitalizing on the “tokenization” vision of crypto — to put every asset on the blockchain. They’ve already put hundreds of assets like Apple, Google, SPY, and more on Ethereum and Solana. This is a crypto use case that has clear legs — most people in the world do not have quick and easy access to Apple stock or other popular US equities. So, Ondo Finance holds real shares of Apple stock, creates a financial representation of the stock (tokenizes it), and puts it on the most popular blockchains. Ondo has done the legal and regulatory work to make it possible — the tokenized asset is an equity-linked note, which is a blockchain-based asset that tracks the price and economic exposure of the asset but does not give the holder shareholder rights (and it doesn’t pass the full 11.5% STRC yield due to a 30% US withholding tax, making it effectively 8% APY).

Ondo recently passed ~$3.5B TVL, as many people in the world want access to these assets if they don’t live in the US. And STRC is an easy integration for them — they have the plumbing to hold US assets and tokenize them. So this is really just flipping a switch.

Why have Saturn and Ondo tokenized STRC? The answer is probably pretty simple — STRC is a very, very popular financial product. The total STRC outstanding is now over $5 billion, and its daily trading volume is over $300 million. So Ondo and others simply want to package it to give to their users.

Saylor talked in his Bitcoin 2026 talk about how he sees STRC evolving — his vision is that banks around the globe will package and give STRC yield to their users. Given the pace that banks move, this will take years (assuming STRC is still around at that time). The great part of the crypto industry is that it’s so flexible that fast-moving companies like Ondo are able to act quickly to deliver STRC to anyone on earth with an internet connection.

Even if Bitcoin, stablecoins, equity infrastructure, and tokenization is all that comes from crypto, it’s a great list. Stablecoins, equity infrastructure, and tokenization will remake the financial system on the internet’s rails. Global access to financial products and speed alone make building the financial system on crypto rails a major upgrade. But I am surprised Pomp leaves out DeFi here — I’d be surprised if we don’t continue to get robust lending/borrowing markets built on top of the tokenization infrastructure. (The canonical example — I want to take out a low-cost loan against my S&P ETF, so I use Aave).

That said, I predict Bitcoin will be the most consequential of the list — by far. Looking at it from a comp perspective: Bitcoiners say Bitcoin deserves to be digital gold. Toly, the founder of Solana, wants Solana to be a global Nasdaq. Gold is a ~$30 trillion asset. Nasdaq — the company — is about a $50 billion company. Solana is already valued at around $50 billion, and Hyperliquid is around $10 billion. Don’t get me wrong, these are great businesses, and once Solana/Hyperliquid has the liquidity and assets trading on the network, there are nearly unlimited financial services businesses that will be created on top of it. I see the bull case. The question is — how much of that value accrues to the software financial layer beneath it?

Bitcoin’s bull thesis, on the other hand, is much more disruptive. If Bitcoin continues to act the way it has, it can serve as a store of value to investors (and regular people) around the world. This competes not only with gold but also with fine art, S&P and other equity ETFs, US Treasuries, bonds — just about every financial product an asset allocator assesses to create a portfolio. This is why it’s so interesting that big banks like Morgan Stanley are telling their wealth advisors that a 2-4% allocation to Bitcoin is acceptable or even recommended.

And… once Bitcoin monetizes as a store of value, there will be tack-on financial products built on the Bitcoin base layer (like STRC or borrow/lending products). Overall, Bitcoin and crypto are winning. But I still think Bitcoin is the truly transformative innovation.

Fidelity Digital Assets@DigitalAssets

Over the past 10 years, a traditional 60/40 portfolio saw annual returns rise from 9.4% to 14.6% with just a 3% allocation to Bitcoin. See @ChrisJKuiper’s full analysis in Getting Off Zero: go.fidelity.com/hxvLO9

From the report: "Institutional investors and money managers now need a well-informed rationale for maintaining a zero-weight position."

Fidelity’s research shows real benefit to adding Bitcoin to a 60/40 portfolio. Notably, adding a 3% BTC allocation significantly improved the annual return (9.4% to 14.7%) and brought the Sharpe ratio above 1.

Of course, the criticism of this analysis is that past performance never guarantees future results. But Fidelity addresses this with a few key arguments: 1) Bitcoin’s 21 million hard cap and 2) monetary inflation. For #2, they cite a .87 r-squared between the relationship of Bitcoin’s price and M2 money supply. This means global money supply explains 87% of Bitcoin’s price appreciation.

So, if you believe governments will continue to print fiat currencies, Bitcoin could have a good place in a portfolio.

Fidelity also argues that the 60/40 portfolio allocation is not sustainable in perpetuity and that fixed income may be at risk. They recommend funding the Bitcoin allocation by reducing their fixed-income position.

I’m not a macro expert, but here’s my interpretation. Based on the US Government’s fiscal situation, interest rates can’t go too high or too low. This is bad for bonds.

The US Government’s debt is very high (~$36 trillion). And the US must pay interest on that debt (already $1 trillion a year). So, spiking the fed funds rate (to the 6-10% range) will effectively bankrupt the government over the long term. Or, more likely, the US will print more money to service the debt (and cause inflation). This is bad for bonds because the real return would be low: low yield plus high inflation.

But on the other side of this, the US Government has to issue more Treasuries to service its debt. The Government is running $2 trillion deficits with no plan to stop. To fund these deficits, they have to sell Treasuries. But if rates are too low, investors won’t be interested in buying the treasuries. So, lowering rates is also difficult.

This leaves little upside for bonds. The US will have to issue more bonds to finance the government. More issuance means more supply on the market, pushing bond prices down.

In all, bonds face pressure from both sides — real returns eroded by inflation, and prices pushed down by oversupply. And the government will likely have to print its way out of the situation. This is all good for Bitcoin.