$2.2 Trillion Asset Manager Buys Stake In MicroStrategy, Gains Indirect Exposure To Bitcoin

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$2.2 Trillion Asset Manager Buys Stake In MicroStrategy, Gains Indirect Exposure To Bitcoin
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American financial services company Capital Group has bought a 12% stake in business intelligence software and related services provider MicroStrategy, according to a US SEC filing. The filing shows that Capital Group has purchased 953,242 shares worth approximately $561 million at the current price of $588.6 per share.

The purchase makes Capital Group ($2.23 trillion assets under management) the second-biggest investor in MicroStrategy, after American multinational corporation BlackRock, which holds a 15.24% stake according to data by CNN Business. Both companies have gained indirect exposure to Bitcoin through Microstrategy, which holds over $3 billion worth of Bitcoin in less than one year.

MicroStrategy now owns 105,085 BTC worth around $3.4 billion since the company started to make strategic purchases in the second half of 2020. In addition to investing heavily in BTC, Microstrategy’s CEO Michael Saylor openly advocates for Bitcoin as a sound store of value, pointing out that his company plans to have bitcoin in its balance sheet for a long time.

More Institutions are Gaining Direct/Indirect Exposure to Cryptocurrencies

Both MicroStrategy and Tesla’s BTC purchases have played a significant role in boosting bitcoin’s bull run in 2020 and early 2021. Microstrategy’s initial purchase of $250 million via Grayscale digital assets management fund occurred in August 2020.

The news opened the doors wide open for other institutional investments in the crypto market, leading other companies to consider and publicly declare their direct or indirect exposure to Bitcoin.

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Microstrategy has since become a key institutional player in the crypto market and has often been used as an example for other institutions who are worried about their future due to the inevitability of fiat inflation.  

Earlier last month, the company announced that it is borrowing $500 million to increase its exposure in crypto by buying more bitcoin. The news marked the first time a company conducts a junk bond sale to finance a bitcoin purchase.  

The move was met with criticism from several traditional market finance analysts such as the chief income strategist at the Oxford Club, Marc Lichtenfeld, who pointed out the Microstrategy is risking millions of dollars to speculate on a highly volatile asset. 

“Does MicroStrategy even have a business anymore or is it a proxy for Bitcoin-with borrowed money?”

Grayscale, another aggressive BTC buyer, and which now owns 3% of all the BTC in circulation recently pulled a similar move by rebalancing its crypto portfolio to purchase Cardano’s ADA.

Despite assumed resistance from some institutional investors, a recent survey by Nickel Digital Assets management indicated that 82% plan to increase their crypto exposure by 2023.