According to a report led by Morgan Stanley Managing Director Nikolaos Panigirtzoglou, Strategy's sale of 3,588 bitcoins and cashing out $216 million is a short-term issue. However, Bitcoin faces deeper long-term structural risks: if tokenization, payments, and settlement activities ultimately shift to permissioned private blockchains rather than public networks, the crypto ecosystem will experience structural devaluation, which will eventually impact Bitcoin.
Morgan Stanley: If tokenization activities occur on permissioned chains, the public chain ecosystem will face structural devaluation
Based on Morgan Stanley's report, their core concern is not the short-term selling pressure from Strategy, but the long-term direction of tokenization, payments, and settlement. If these activities end up on permissioned chains instead of public blockchains, the crypto ecosystem could face the following structural impacts:
Liquidity deterioration: Funds do not flow into native tokens on public chains
Reduced capital flow: Institutional capital bypasses public chains and moves toward private infrastructure
On-chain transaction slowdown: Activities shift to opaque permissioned environments
Drag on Bitcoin: Overall vitality of the crypto ecosystem declines, ultimately affecting Bitcoin’s market positioning
Institutions favor permissioned blockchains because they offer privacy protection, KYC/AML compliance, governance mechanisms, higher throughput, legal liability frameworks, and regulatory certainty.
BIS advocates "Unified Ledger," SWIFT and CBDC measures strengthen regulated channels
Citing Morgan Stanley's report, the Bank for International Settlements (BIS) has warned against using permissionless public blockchains as systemic financial infrastructure, proposing the creation of a "Unified Ledger" to store tokenized central bank digital currencies (CBDCs), bank deposits, and assets within regulated boundaries.
Tokenized deposits (digital claims on bank balances, regulated and insured) are a typical example; if widely adopted in a non-transferable form favored by regulators, they could capture market share from stablecoins in institutional payments.
SWIFT’s blockchain projects and CBDC initiatives (such as digital euro and digital yuan) will further reinforce these regulated channels.
RWA tokenization market size approaches $50 billion
According to Morgan Stanley, the real-world assets (RWA) tokenization market is nearing $50 billion, mostly based on Ethereum; however, analysts see this as early experimentation rather than a mature architecture. As technology matures, issuance, custody, and settlement may migrate to private infrastructure, with public chains focusing on distribution and interoperability.
Cases like DTCC and Securitize are cited as evidence of this trend; analysts also question whether, considering capital savings from deferred net settlement, public settlement models remain the most effective choice for regulators.
Morgan Stanley presents three scenarios to disprove these arguments: hybrid models and stablecoin-friendly regulation
The report outlines three scenarios that could invalidate the above points: first, a hybrid model where both public and private chains are important becomes mainstream; second, under friendly regulatory rules (such as the Clarity Act), stablecoin adoption rates increase; third, Bitcoin continues to serve as "digital gold," providing a hedge against devaluation regardless of developments in other crypto sectors.
Notably, Morgan Stanley analysts point out that even if the Clarity Act passes this year, it might do so at the expense of public stablecoins, promoting the development of bank-issued deposit tokens.
Frequently Asked Questions
What does Morgan Stanley see as Bitcoin’s biggest long-term structural threat?
According to a report led by Nikolaos Panigirtzoglou, the biggest long-term structural threat is institutions and banks adopting permissioned private blockchains instead of public networks. If tokenization, payments, and settlement activities shift to permissioned chains, the crypto ecosystem will face structural devaluation such as liquidity deterioration and reduced capital flow, ultimately dragging down Bitcoin.
How significant is Strategy’s Bitcoin sell-off to Bitcoin itself?
Morgan Stanley’s report states that Strategy’s sale of 3,588 bitcoins (worth $216 million) in early July, the largest single sale in the company’s history, is a short-term issue. It may trigger short-term selling pressure but is not the primary long-term structural threat to Bitcoin.
Under what conditions would Morgan Stanley’s "private chain threat" argument become invalid?
The report suggests three scenarios: a mainstream hybrid model where both public and private chains coexist; widespread adoption of stablecoins driven by friendly regulation (such as passing the Clarity Act); and Bitcoin continuing to serve as "digital gold," providing a hedge regardless of other crypto sector developments.
