Morgan Stanley inadvertently buys into the Bitcoin craze

  • Morgan Stanley increases the total stake in MicroStrategy to 10.9%, owning a total of 792,627 shares.
  • Increased interest in MicroStrategy seems to stem from Bitcoin's stellar rally.
  • MicroStrategy's investment in Bitcoin as a primary treasury asset makes it a de facto ETF.

Morgan Stanley, a multinational investment bank and financial services company, declared to own 10.9% of MicroStrategy's shares. This additional investment of 650,000 shares in Q3 of 2020 came when Bitcoin saw its price skyrocket over 170%.

Morgan Stanley's investment in MicroStrategy

In part, Morgan Stanley's decision to invest in MicroStrategy is due to its stock's stellar performance in the last quarter of 2020. The credit to MicroStrategy's performance is perhaps due to their foray into Bitcoin in August 2020, which was a first of its kind, especially considering the size of their investments. 

MicroStrategy has profited a total of 336% on its Bitcoin investment as of January 9, 2021, and during the same period, its stock price soared over 330%. The firm's decision has paid off from a financial standpoint while paving the path for other institutions to follow suit.

Twitter CEO Jack Dorsey's payments platform, Square, invested a sizable $50 million into Bitcoin after MicroStrategy announced its investment into the pioneer cryptocurrency. Some of the other institutions that followed suit include Stone Ridge Holdings, 3iQ The Bitcoin Fund, Agro Blockchain PLC, and Fortress Blockchain.

Morgan Stanley isn't the first investor to increase its MicroStrategy holdings, and it won't be the last. Many high net worth enterprises are looking for new investment alternatives to hedge against the growing uncertainty in the global financial system. Those who cannot directly invest in Bitcoin are doing so by purchasing stocks from companies that have exposure to this digital asset, just like Morgan Stanley did.

Loosely put, MicroStrategy's investment in Bitcoin as a primary treasury asset makes it a de facto ETF. 

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