It seems another financial behemoth has gotten on the Bitcoin train, although not through a direct purchase of BTC.
Morgan Stanley, one of the biggest financial institutions in the world, recently announced the additional acquisition of Microstrategy shares. The purchase ups its ownership in the business intelligence firm to 10.9 percent.
This ownership stake also means Morgan Stanley owns 10.9 percent of Microstrategy’s multi-billion dollar Bitcoin treasury, resulting in ownership of almost $300 million in Bitcoin at its current price level.
Do banks want bitcoin?
Morgan Stanley already owned a stake in in Microstrategy. However, this increase raises it by a significant margin. As a multinational investment bank, this purchase is a big signifier of Morgan Stanley’s outlook on Bitcoin in that it makes up a very significant amount of Microstrategy’s current reserve treasury. This purchase shows that even banks like Morgan Stanley are increasing exposure to Bitcoin. It is an idea that could have seemed like a fairytale less than one year ago.
Is Microstrategy setting a new bitcoin standard?
Microstrategy was the first large publicly traded company to actively convert a portion of its reserve treasury into Bitcoin. Many traditional observers heavily criticized the move at first. Citigroup, another investment banking company, initially downgraded its outlook on Microstrategy’s stock price. They thought this decision would greatly hurt investor confidence in the company.
Citigroup erred with its prediction. Bitcoin’s price continued to rise and with it, Microstategy’s BTC holdings and its overall stock performance. Over the last year, MSTR stock has increased by over 350 percent.
Microstrategy CEO and converted Bitcoin bull Michael Saylor steered the company toward BTC. Saylor was initially skeptical of Bitcoin, but the mix of Bitcoin’s fundamentals and the global economic and social strife caused by the pandemic changed his mind.
One of the biggest factors for Saylor is the increase rate of inflation seen by fiat currencies across the globe. He sees Bitcoin as a store of value and a better hedge against inflation than gold. As such, he decided that it would be best for Microstrategy to convert a portion of its treasury reserve of US dollars into Bitcoin.
After an initial multi-hundred million dollar Bitcoin purchase, Saylor decided that Microstrategy needed even more Bitcoin. The company then raised $650 million via a debt offering. This catapulted Microstrategy’s Bitcoin purchases over $1 billion in total. Currently, the holding is valued at around $3 billion. Many other firms have since followed suit. Firms like Mass Mutual, Skybridge Capital, and Ruffer are investing hundreds of millions or more into Bitcoin.