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Capital Group Acquires 12% Stake in Bitcoin-Heavy MicroStrategy

UTC by Steve Muchoki · 3 min read
Capital Group Acquires 12% Stake in Bitcoin-Heavy MicroStrategy
Greg Ellison, CEO of Capital International Group. Photo: Capital International Group / Facebook

With a majority of MicroStrategy’s treasury in Bitcoin, Capital Group has increased its exposure to cryptocurrency.

Capital International Group, a $2.3 trillion asset manager, has bought a 12.2% stake in MicroStrategy Inc (NASDAQ: MSTR). The latter is a cloud software firm with 105,085 Bitcoin holdings. Going by today’s bitcoin prices of $33,233 from CoinMarketCap, MicroStrategy’s holdings are valued at roughly $3.4 billion.

An SEC filing revealed today showed that investors from Los Angeles-based Capital International, placed a stake in MicroStrategy last month. As per MicroStrategy’s last closing share price of $588.69, the 953,242 shares purchased are to the tune of $561 million.

With a majority of MicroStrategy’s treasury in Bitcoin, Capital Group has increased its exposure to cryptocurrency. Currently, BlackRock sovereign wealth fund is the only other investor surpassing Capital Group. BlackRock has a 14.56% stake in MicroStrategy, equal to $700 million.

Capital Group Investment in MicroStrategy

Led by Michael Saylor, MicroStrategy began its Bitcoin-acquisition spree in August 2020, when it invested $250M in the cryptocurrency. In the latest round, the company acquired 13,005 tokens for $489 million.

Moreover, the data analytics firm has even gone to the point of selling debt to buy Bitcoin. Currently, the company’s BTC holdings are the largest ever held by any publicly traded company. Furthermore, the Virginia-based firm has also pronounced bitcoin as its “primary” treasury reserve asset. This means the cryptocurrency is being utilized in daily cash management.

MicroStrategy’s investment behavior is one of the main reasons leading up to cryptocurrencies’ bull run, which began last year. The firm’s CEO Michael Saylor is also acclaimed as one of the digital asset’s proponents, especially on Twitter.

MicroStrategy stock, on the other hand, has gained 51.51% YTD and 404.62% in 1-year. However, shares have shed off 7.19%, 6.64%, and 30.62% in 5-days, 1-month, and 3-months respectively. As of July 13, 2021, at 4.21 a.m. EDT, shares closed at $588.69 having shaved off 6.36%, according to MarketWatch.

Capital Group is one of the biggest investment organizations in the world. The firm’s stake in MicroStrategy shows investors have come to have great interest in such companies. Purchasing shares in MicroStrategy appears as a better alternative to directly tying their fate to that of Bitcoin.

This notion has been further fueled by the lack of Bitcoin exchange-traded funds (ETFs) in the US. An example of this is the Digital Transformation ETF launched by VanEck, which replicates Bitcoin’s performance. This kind of asset gives investors exposure to companies invested in cryptocurrencies. Such firms include MicroStrategy, Square Inc (NYSE: SQ), and Coinbase Global Inc (NASDAQ: COIN), among others.

Nevertheless, bitcoin ETFs have been met with massive stumbling blocks as the SEC is unwilling to embrace them. VanEck’s ETF, for instance, still awaits SEC approval. The last time the application ruling was due, the regulator extended its decision window by another 45 days.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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