Stablecoins Move Toward Becoming a Core Payment Layer

One of the report’s central themes is the expanding role of stablecoins in global payments. With roughly 46 trillion dollars in transaction volume recorded in 2024, stablecoins surpassed many traditional platforms. Yet, according to the analysis, widespread daily usability remains limited. Emerging solutions that integrate with regional payment rails, support QR-based transactions, and enable real-time transfers are beginning to address this gap. These developments position stablecoins not as niche tools, but as a foundational component of the internet’s financial infrastructure.

Tokenization Enters a Transformational Phase

The report also draws attention to inefficiencies in today’s tokenization practices. Many financial institutions still rely on simple one-to-one digital replicas of real-world assets, a method a16z considers outdated. Looking ahead, the firm expects tokenized assets to evolve through more advanced derivative structures that unlock greater liquidity, lower costs, and faster settlement. The future of tokenization, the report suggests, lies not in copying existing products onto a blockchain but in reimagining how those assets should function in a digital-native environment.

From Identity Verification to “Know Your Agent”

As AI agents proliferate across financial operations, the report anticipates a shift in compliance frameworks. Similar to how individuals must verify their identities before accessing financial services, AI agents will need to undergo authentication as well. This transition marks the emergence of a “Know Your Agent” standard, where autonomous systems communicate, operate, and even audit one another.

Privacy-Focused Blockchains Set for Heightened Competition

Privacy technology is projected to become a major battleground in 2026. While cross-chain asset transfers have become more streamlined, transferring sensitive data or user privacy remains significantly more difficult. Networks capable of providing strong confidentiality guarantees are expected to attract considerable market share.

Forecasting Markets and the Rise of On-Chain Media

The report also foresees growth in prediction markets, which are likely to expand into broader political, economic, and social events. Additionally, analysts and commentators may begin staking funds on-chain to back their public statements. Such transparent financial alignment could reshape how credibility is established in digital media.

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Cryptocurrencies: Speculative Yet Increasingly Mainstream

Titled “Asset Allocation Considerations for Cryptocurrencies”, the report emphasizes how the digital asset market has rapidly expanded, now boasting a market capitalization of $4 trillion. Despite their notorious volatility, cryptocurrencies continue to attract investor interest and are increasingly being recognized as a legitimate asset class.

The report also points out that with growing political and institutional support, particularly from the Trump administration and Congress, investors now have easier access to digital assets through exchange-traded products (ETPs).

Spotlight on Bitcoin

While the analysis covers the broader crypto market, Bitcoin remains the central focus. Morgan Stanley experts describe cryptocurrencies as “speculative but popularizing assets,” with Bitcoin standing out as a rare digital asset comparable to gold.

The report underscores Bitcoin’s unique value proposition, framing it as a form of digital gold that could serve as a hedge in diversified portfolios.

Morgan Stanley’s Portfolio Perspective

Morgan Stanley makes it clear that official asset allocation models do not yet include direct exposure to crypto. However, the firm recognizes investor demand and stresses flexibility:

“We aim to support financial advisors and clients who wish to include cryptocurrencies in multi-asset portfolios in a balanced way.”

Currently, the GIC guides over 16,000 financial advisors globally, who collectively manage more than $2 trillion in client assets.

Investor Guidance: Conservative and Cautious

The conclusion of the report carries a clear message for investors: while cryptocurrencies have historically delivered strong returns, they also bring significant risks. High volatility, coupled with increased correlation during times of market stress, makes crypto a challenging asset to manage.

As a result, Morgan Stanley advises investors to keep crypto exposure limited within their portfolios and to practice regular rebalancing to mitigate risks.

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Liquidity Is Returning, Dip Buying Accelerates

One of the report’s most striking points was the observation that liquidity in the crypto market is reviving. The recent price increases in Bitcoin (BTC) and Ethereum (ETH) are supported by strong buying signals from lower levels.

Whale addresses have accumulated significantly, particularly in the $60,000–$62,000 price range.

The BTC price has begun to stabilize above the $60,000 level, which currently serves as a key psychological and technical support zone.

Additionally, retail investors have started buying during this period, signaling a recovery in investor confidence.

Stablecoin Supply Expands: Risk Appetite Rising

Another significant finding in the report was the increase in the supply of Tether (USDT) and other stablecoins. This trend suggests that investors are preparing to allocate capital into crypto assets:

USDT supply is rising not only on Ethereum but also on networks like TRON, which offer lower transaction fees.

The expansion in stablecoin supply indicates more inflows into exchange reserves, which could lead to a rise in trading volume.

Inflation and Interest Rate Expectations Fuel Uncertainty

The U.S. Federal Reserve (FED)’s cautious stance on interest rate cuts and the distance of U.S. CPI data from target levels are increasing the risks of short-term market volatility:

The FED is not expected to cut rates soon, which could increase demand for the U.S. dollar.

Persistent inflationary pressures may lead to a shift away from risk assets, impacting crypto market sentiment in the near term.

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James Butterfill, Head of Research at CoinShares, noted, “While the week started with inflows, unexpectedly strong US retail data mid-week triggered $146 million in outflows.”

Bitcoin ETFs In The Red In April!

Total assets under management (AUM) rose 1.4%, increasing from $129 billion on April 11 to $131 billion by April 18.

BlackRock‘s iShares ETFs saw the highest weekly inflows at $182 million, while Fidelity reported $123 million in outflows. Bitwise added $24 million, and European issuer 21Shares recorded $37 million in inflows.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

So far, all US-based crypto ETPs are in the red for April. 21Shares remains the only issuer with net inflows this month at $28 million.

XRP And 21Shares Lead Inflows This Week

Among individual assets, Ethereum (ETH) saw the largest outflows at $26.7 million, while XRP stood out with $37.7 million in inflows — making it the top-performing asset of the week.

Bitcoin (BTC) experienced minor outflows of $6 million, bringing April’s total to $894 million in outflows. However, BTC still leads year-to-date with $541 million in inflows, ahead of ETH with $215 million and XRP with $214 million.

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