Digital assets, including cryptocurrencies and stablecoins, are rapidly moving to the center of global financial markets. Once considered a speculative novelty, they have become a multibillion-dollar business, increasingly influencing how markets operate and how money moves.
Offering 24/7 trading, lower transaction costs, near-instant settlement and improved transparency, digital assets are increasingly attracting the attention of investors, businesses and policymakers around the world. Global market capitalization briefly surpassed $4 trillion, reflecting the accelerating pace of adoption.
As interest grows, regulators in the United States, Europe and Asia are quickly moving to establish oversight frameworks. Investment banks and other financial firms, including Morgan Stanley, are now offering their clients exposure to digital assets in their portfolios. Many companies are already adapting their systems to accept or send payments in digital currencies.
“The digital asset trend has shifted from focusing only on cryptocurrencies, like Bitcoin and Ethereum, to exploring the tokenization of all assets,” says Amy Oldenburg, head of digital asset strategy at Morgan Stanley. “Our industry is currently exploring how blockchain technology can deliver value across all areas of our business. While these themes are grabbing headlines, we are still at the very beginning.”
Rapid adoption by financial companies
Industry momentum accelerated in 2024, when the U.S. Securities and Exchange Commission approved the first Bitcoin and Ethereum exchange-traded funds (ETFs). Since then, financial platforms, particularly those serving institutional clients, have started to integrate crypto. Pension funds, endowments, and foundations have also begun making small allocations to Bitcoin as a hedge against long-term inflation.
Crypto ETFs briefly surpassed $200 billion in assets under management. These funds received more than $40 billion in 2025 despite the volatility that marked last year.
“What’s interesting about the crypto space is that adoption has started on the retail side, with institutions slowly starting to explore allocations,” says Michael Cyprys, head of U.S. broker-dealers, asset managers and exchanges for Morgan Stanley Research. “It’s the opposite of what we’ve seen historically, with institutions traditionally leaning before retail, whether it’s commodities or private markets.”
Bitcoin’s Unusual High Performance
Among digital assets, Bitcoin remains the most popular. Investors see it as a macro hedge against inflation and currency devaluation. Its total market value is now between $1 trillion and $2 trillion, about half the size of the total digital asset market.
Many investors have been attracted to Bitcoin due to its significant gains over the past ten years.
“Long-term performance shows an unusually high 10-year annualized return of 86% for Bitcoin, which is unlikely to be repeated over the next decade,” says Denny Galindo, investment strategist at Morgan Stanley Wealth Management. “To estimate long-term returns of Bitcoin, we need to consider long-term supply and demand, including penetration and adoption, but it is difficult to predict short-term prices given its relatively short history and high volatility.”
Stablecoins get a regulatory boost
Stablecoins have also become one of the fastest growing digital assets. It is a form of cryptocurrency tied to a reference asset, primarily the US dollar, to reduce volatility. They offer the same efficiency and programmability as blockchain technology: stablecoins are simple to use, can be processed quickly regardless of geographic location, and have fewer perceived risks than cryptocurrencies.
In July, the US Congress passed the Genius Act, legislation that creates a framework governing how stablecoins are issued, used and reported. The European Union is proposing similar rules, and the retail digital euro could come into existence by 2029, while the wholesale digital euro could go live sooner.
“After the approval of the Genius Act, many players in the financial sector are working on their stablecoin strategy,” Galindo said.
Stablecoin reached full market capitalization of $300 billion in September, an increase of 75% compared to the previous year. According to some estimates, the market could surpass $2 trillion by 2028.
The four seasons of crypto
Since Bitcoin’s inception in 2008, digital assets have followed pronounced four-year price cycles: three years of gains followed by one year of decline. Analysts attribute this unique trend to changes in interest rates, changes in global liquidity, or supply dynamics similar to those seen in commodity markets.
“We don’t know for sure which is the dominant factor, but we divide the four-year cycle into four seasons: spring, summer, autumn and winter,” explains Galindo.
Bitcoin reached its all-time high on October 6 and then began a downtrend.
“Historically, crypto winters have lasted between 12 and 14 months, suggesting that if winter started in October, it could extend into 2026,” Galindo said. “In terms of magnitude, previous cycles have seen declines of around 77% to 84%. »
And then: innovation and market expansion
The next wave of innovation will likely focus on multi-asset tokenized ETFs, expanded access through wealth management platforms, and the potential inclusion of crypto ETFs in model portfolios.
More recently, the SEC adopted generic ETF listing standards for crypto ETFs, which could speed up launches and reduce regulatory friction.
Exchanges and brokers also see an opportunity in accelerating cryptocurrency trading. The Chicago Mercantile Exchange (CME) traded over 340,000 contracts on its crypto complex in Q3 2025, up over 200% year-over-year and the momentum continued in Q4 2025 with over 370,000 contracts traded. CME is currently rolling out smaller, more accessible contracts with more expiration dates, more tokens, longer contracts, and 24/7 trading of crypto derivatives, which are expected to go live this year.
Morgan Stanley’s Global Investment Committee expects the cryptocurrency to generate returns of around 6% over a seven-year horizon, but with significant risk for investors: Crypto’s annualized volatility is around 55%, or about four times that of the S&P 500 index.
Even small allocations to crypto can have an outsized impact on overall portfolio risk. For example, according to the Committee’s simulations, adding just a 6% crypto position to a growth-oriented portfolio nearly doubled overall volatility.
“We leave aside the most bullish projections – which call for crypto to move the U.S. dollar – and the most bearish – which assume the technology fails, is banned, or collapses in a tulip mania-style bubble,” Oldenburg said. “It is more important at this stage to encourage investors to learn about this digitalization trend that is affecting the entire financial services sector.”
Conclusion : Digital assets are reshaping the global financial landscape. Adoption is accelerating, institutional views are evolving, and regulators are proposing clearer rules. Even as opportunities grow, risks remain significant and investors and businesses will need disciplined strategies as the ecosystem evolves.
