Institutions are entering the market! Which traditional Wall Street financial institutions are holding Bitcoin?

The influx of institutional enterprises - is it speculation or a return to the value of Bitcoin?

(This article is authorized to be reprinted from BlockBeats, original article here)

Source: BlockBeats

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On January 4, 2021, when the price of Bitcoin surpassed $34,000, the Financial Times stated, "Cryptocurrencies are becoming more integrated into the financial system."

This was a milestone day. After 8 years, the renowned international financial media, the Financial Times, announced to its 450,000 readers that their views on Bitcoin have changed because back in 2013 when the price of Bitcoin was $138, the Financial Times wrote in a headline, "Going it buying frenzy sends virtual currency on way to becoming next bubble."

Indeed, the Financial Times represents the voice of traditional Wall Street institutions.

There is already a consensus on this bull market: this round of Bitcoin's market trend is characterized by "institutional bulls," as institutions have long voted for Bitcoin with their money, openly buying Bitcoin as part of their asset allocation. The influx of institutions combined with retail investors buying Bitcoin through various channels has continuously pushed Bitcoin to new highs, with its market value surpassing Facebook at one point, ranking seventh in the global list of valuable assets, just behind Alphabet Inc. (Google's parent company) and Tesla.

So, which traditional funds and institutions hold Bitcoin?

BlockBeats has compiled a list of publicly disclosed corporate institutions that hold Bitcoin. Due to restrictions in various financial markets and regulatory frameworks, companies that purchase Bitcoin are divided into direct and indirect purchasers.

Institutions Directly Purchasing Bitcoin

Financial Institutions

SkyBridge Capital

On January 4, 2021, alternative investment firm SkyBridge Capital announced the launch of the "SkyBridge Bitcoin Fund LP." To kickstart the fund, SkyBridge Capital and its affiliates have invested $25.3 million. As of January 4, the Bitcoin fund positions the flagship funds had invested in November and December 2020 were valued at $310 million.

According to SkyBridge Capital's official statement, the SkyBridge Bitcoin Fund will be custodied by Fidelity Digital Assets and audited by Ernst & Young. The fund charges a management fee of 0.75% and does not have an incentive fee. Investors can subscribe to the fund directly through the official website, with a minimum investment of $50,000.

According to BlockBeats, in 2017, SkyBridge Capital planned to sell the majority of its shares to HNA Capital (USA). If the acquisition had been completed, HNA Capital would have owned 80% of SkyBridge Capital. However, in 2018, due to the intervention of the Committee on Foreign Investment in the United States (CFIUS), SkyBridge Capital abandoned the merger plan with HNA Capital.

Miller Value Partners

Mvp 1 fund is a hedge fund operated by Miller Value Partners, with approximately $41.9 million in assets, of which the management holds 79% of the shares. Bill Miller, the founder, chairman, and chief investment officer of Miller Value Partners, stated in his market analysis public letter in the fourth quarter of 2020 that in an inflationary environment, more institutional funds will purchase Bitcoin.

Bill Miller previously managed funds at Legg Mason, with his funds outperforming the S&P 500 Index for fifteen consecutive years from 1990 to 2005. In 2017, Miller made a significant investment in a single asset, Bitcoin.

In an interview, Miller mentioned that at the end of 2017, Bitcoin accounted for half of Mvp 1 fund's holdings, mainly due to the significant rise in Bitcoin's value. Public information shows that in 2014, Miller spent 1% of the net assets to purchase Bitcoin. In 2015, Miller continued to increase his holdings. Miller revealed in a podcast that the average prices of Bitcoin purchased in 2014 and 2015 were $350.

Currently, the minimum investment amount for Mvp 1 fund is $1 million.

Note: Mvp 1 fund is no longer accessible through Miller Value Partners for inquiries. Some data is sourced from Private FUND Data.

MassMutual

On December 11, 2020, one of the five largest life insurance companies in the U.S., MassMutual, purchased $100 million worth of Bitcoin for its general investment account through New York Digital Investment Group (NYDIG). This investment represents only 0.04% of MassMutual's investment account funds (approximately $235 billion). MassMutual currently holds a minority stake of $5 million in NYDIG.

Tudor Investment Corp

Tudor Investment Corp is an asset management company founded by billionaire Paul Tudor Jones. In May 2020, Paul Tudor Jones mentioned that his Bitcoin holdings accounted for 1%-2% of his fund's assets under management. Tudor Investment's assets under management are approximately $38.3 billion, with the Tudor BVI Global Fund accounting for $21.5 billion. Jones purchased Bitcoin through the Tudor BVI Global Fund.

The minimum investment amount to participate in the Tudor BVI Global Fund is $10 million.

Publicly Listed Companies

According to Bitcoin Treasuries data, there are currently 16 publicly listed companies worldwide that have announced holdings of Bitcoin, totaling approximately 115,300 BTC, accounting for 0.54% of the total Bitcoin supply.

The company that holds the most Bitcoin is MicroStrategy, a business intelligence and mobile software enterprise established for 32 years. In August 2020, MicroStrategy invested $250 million in Bitcoin as part of its treasury reserve assets due to declining cash returns, a weak dollar, and other global macroeconomic factors, resulting in the company's stock reaching a new high since 2001.

Following Bitcoin's surge, the returns from holding Bitcoin continued to drive MicroStrategy's stock price up. After the increase in performance, MicroStrategy raised $650 million through senior convertible notes and used all of it to purchase Bitcoin. Some investors liken this to a "perpetual motion machine," where a publicly listed company buys Bitcoin, the Bitcoin price rises, the increased Bitcoin price boosts the company's income, and the increased income leads to a rise in the company's stock price.

Of course, this scenario is not unique to cryptocurrency. In 2020, the logic of the rise in liquor funds and tech stocks is similar.

Institutions Indirectly Purchasing Bitcoin

Currently, for ordinary investors, private funds, and mutual funds, the most accessible product for indirect Bitcoin investment is Grayscale Investments' "Grayscale Bitcoin Trust." This is a Bitcoin fund offered in trust form that accepts physical (Bitcoin) or cash subscriptions, held in GBTC form, with a lock-up period of six months, and can be traded through OTC Markets upon maturity.

In 2019, a QDII fund financial product "Bank of China Global Strategic Securities Investment Fund (FOF)" issued by Bank of China Fund purchased 13,000 shares of GBTC worth $1.35 million.

BlockBeats compiled a list of institutions that have recently disclosed still holding GBTC:

The institution holding the most GBTC is Three Arrows Capital, a hedge fund founded in 2012 based in Singapore, primarily investing in cryptocurrency infrastructure, decentralized finance projects, and derivative platforms. Three Arrows Capital is also a shareholder of the second-largest institution holding GBTC, BlockFi. BlockFi is a cryptocurrency lending platform that completed a $30 million Series B financing in February 2020. According to BlockFi CEO Zac Prince, BlockFi is expected to go public in the second half of 2021.

Additionally, renowned as the "female Buffett," Catherine Wood's fund ARK invested in GBTC as early as 2015, and her "Next Generation Internet ETF" ARKW recently increased holdings of 780,000 shares of GBTC in the past month, valued over $35 million. ARKW ranks sixth globally in ETFs over the past five years with a total investment return rate of 555.79%, where GBTC is its third largest holding, representing 4.73% of its total funds.

Following ARK in GBTC holdings is the hedge fund Horizon Kinetics. Horizon Kinetics' five trust funds (KINETICS PORTFOLIOS TRUST) and a closed-end fund (RENN Fund) hold a total of 5.18 million GBTC shares, valued at approximately $230 million. In addition to purchasing GBTC, Horizon Kinetics is involved in Bitcoin mining, with its mining machines hosted at Core Scientific's facility, which has a 450 MW power load.

Notably, the well-known Rothschild Investment Corp, under the Rothschild family, indirectly holds Bitcoin through holding GBTC.

Conclusion

In 2020, an increasing number of institutional enterprises began accepting and purchasing Bitcoin. Bitcoin's global influence is also growing. However, Bitcoin's global impact still cannot compare to that of gold. Based on the value of global gold reserves, the price of one Bitcoin would need to rise to $380,000 to equal gold.

It is challenging to determine whether the rush of institutional enterprises is speculative or a return to the value of Bitcoin. Capital markets always have a perpetual motion, varying only in duration.

Bitcoin is like a social experiment, with each enterprise purchasing Bitcoin for potentially different reasons. Each company is simply choosing the world they want with the money in their pockets.