Vanguard's Indirect Bitcoin Exposure through Large Stake in MicroStrategy
Summary:
Despite steering clear of direct Bitcoin ETFs, asset manager Vanguard indirectly has considerable exposure to Bitcoin through owning a large stake in MicroStrategy (MSTR). As the second-largest institutional owner with 8.24% of MSTR shares, Vanguard's mutual funds could feel the impact of Bitcoin price movements. This provides a method for clients to indirectly invest in the cryptocurrency, despite Vanguard's focus on traditional asset classes like equities, bonds, and cash. The future may see a surge in Bitcoin-related products, suggesting potential growth in Vanguard's indirect crypto exposure.
Despite not offering Bitcoin exchange-traded funds (ETFs) directly, financial portfolio manager Vanguard does have indirect exposure to the cryptocurrency, given its extensive investment in MicroStrategy (MSTR). Vanguard Group was identified as the second-largest institutional owner of MSTR stocks as of September 2023, holding over 1,126 million shares, accounting for an 8.24% stake in the enterprise, according to Yahoo Finance data. Additionally, Vanguard’s mutual funds including Vanguard Total Stock Market Index Fund, Vanguard Small-Cap Index Fund, Vanguard Extended Market Index Fund, and Vanguard Small-Cap Growth Index Fund, feature MicroStrategy’s stock. Given that MicroStrategy has notably integrated Bitcoin (BTC) into its balance sheet – amassing 189,150 BTC to date, at a combined buying cost of around $5.9 billion – its shares have soared, leading some observers to refer to MSTR as “effectively a leveraged Bitcoin ETF”. Meanwhile, Vanguard maintains its distance from the direct crypto market trading, as evidenced on January 11 when it stopped the acquisition of spot Bitcoin ETFs at major Wall Street exchanges, citing that they do not fit with its vision. Instead, Vanguard emphasizes on traditional asset groups like equities, bonds, and cash, which it deems as crucial components for a well-rounded, enduring investment portfolio. Nevertheless, its substantial indirect involvement with Bitcoin through MSTR means that fluctuations in this cryptocurrency's price are likely to influence Vanguard’s mutual funds and MSTR share value. This could also provide a chance for customers to indirectly invest in cryptocurrencies via this platform. Predictions are that there will be a rise in Bitcoin-related products in the imminent future, such as leveraged Bitcoin ETFs, short Bitcoin ETFs, and Bitcoin-collateralized crypto loans.
Published At
1/13/2024 12:10:10 AM
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