Which traditional financial institutions on Wall Street hold Bitcoin?

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

This is a milestone day. Eight years later, the famous international financial media Financial Times announced to its 450,000 readers that they had changed their views on Bitcoin, because in 2013 when the price of Bitcoin was $138, the Financial Times wrote in the headline "Goining it buying frenzy sends virtual currency on way to becoming next bubble".

The Financial Times is actually a summary of the voices of traditional Wall Street institutions.

There is a general consensus on this bull market: this round of Bitcoin is an "institutional bull market". Institutions have already voted for it with their money and openly bought Bitcoin as their asset allocation. The entry of institutions and the rich channels for retail investors to buy Bitcoin have allowed Bitcoin to continuously set new highs. Its market value once exceeded Facebook, ranking seventh in the global ranking of valuable assets, following Alphabet A (Google's parent company) and Tesla.

So which traditional funds and institutions hold Bitcoin?

BlockBeats has collected statistics on companies and institutions that have publicly disclosed that they hold Bitcoin. Due to restrictions on financial markets and regulatory regulations in various countries, companies and institutions that purchase Bitcoin are divided into two types: direct purchases and indirect purchases.

Institutions that buy Bitcoin directly

Financial institutions

Skybridge Capital

On January 4, 2021, alternative investment company SkyBridge Capital announced the launch of the Bitcoin Fund "SkyBridge Bitcoin Fund LP". To launch the fund, SkyBridge Capital and its affiliates have invested $25.3 million. At the same time, on January 4, SkyBridge Capital's Bitcoin fund positions invested in November and December 2020 on behalf of its flagship funds were worth $310 million.

According to Skybridge Capital, Fidelity Digital Assets will serve as the Bitcoin custodian for the Skybridge Bitcoin Fund, and Ernst & Young will serve as the auditor. The fund only charges a 0.75% management fee and no incentive fee. The fund can be subscribed directly through the official website, with a minimum investment of $50,000.

According to BlockBeats, in 2017, Skybridge Capital planned to sell its majority stake to HNA Capital (USA). If the acquisition is completed, HNA Capital will own 80% of Skybridge Capital. In 2018, Skybridge Capital abandoned its plan to merge with HNA Capital due to the obstruction of the US Committee on Foreign Investment in the United States (CFIUS).

Miller Value Partners

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

Bill Miller previously managed a fund at Legg Mason, and the fund he managed had a return rate that exceeded the S&P 500 index for fifteen consecutive years from 1990 to 2005. In 1990, half of Miller's fund held AOL (20%), Dell (20%), and Fannie Mae (10%). Miller's second large-scale investment in a single target occurred in 2017, and the target was Bitcoin.

Miller said in an interview that at the end of 2017, the value of Bitcoin accounted for half of the Mvp 1 fund. Of course, the main reason was the sharp rise in Bitcoin. Public information shows that in 2014, Miller spent 1% of his net worth to buy Bitcoin. At the same time, in 2015, Miller continued to increase his position. According to Miller's information on the podcast, the average price of Bitcoin purchased in 2014 and 2015 was $350.

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

Note: Currently, the Mvp 1 fund can no longer be queried through Miller Value Partners, and some data comes from Private FUND Data.

MassMutual

On December 11, 2020, MassMutual, one of the top five life insurance companies in the United States, purchased $100 million worth of Bitcoin for its general insurance account through New York Digital Investment Group (NYDIG). This investment is only 0.04% of MassMutual's investment account funds (about $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 said that the Bitcoin assets he purchased accounted for 1%-2% of his investment management scale. Tudor Investment has an asset management scale of approximately US$38.3 billion, of which the Tudor BVI Global Fund accounts for US$21.5 billion. Jones purchased Bitcoin through the Tudor BVI Global Fund.

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

Public Company

According to data from Bitcoin Treasuries, there are currently 16 listed companies in the world that have announced that they hold Bitcoin, with a total of approximately 115,300 Bitcoins, accounting for 0.54% of the total Bitcoin supply.

MicroStrategy, the listed company that bought the most Bitcoin, is a 32-year-old business intelligence and mobile software company. Before the Internet bubble burst in 2000, MicroStrategy's stock price was as high as $3,330 per share. In the nearly 20 years since then, the stock price of this former star company has only reached a maximum of $226. Until August 2020, MicroStrategy invested $250 million in Bitcoin as a treasury reserve asset, citing diminishing cash returns, a weak dollar, and other global macroeconomic factors, so the stock price hit a new high since 2001.

Subsequently, with the surge in Bitcoin, the income from holding Bitcoin stimulated the continued rise in MicroStrategy's stock price. After the performance increased, MicroStrategy raised another $650 million through senior convertible bonds and bought all of it in Bitcoin. Some investors described this as a "perpetual motion machine". When listed companies buy Bitcoin, the price of Bitcoin rises. The rise in Bitcoin prices increases the company's revenue, and the increase in company revenue leads to an increase in the company's stock price.

Of course, this scenario does not only happen in cryptocurrencies. In 2020, the logic behind the rise of liquor funds and technology stocks was similar.

Institutions that indirectly purchase Bitcoin

At present, the product that is easier for ordinary investors, private equity funds and public equity funds to indirectly purchase Bitcoin on the market is the "Grayscale Bitcoin Trust" launched by Grayscale Investments. This is a Bitcoin fund launched in the form of a trust, which can accept physical (i.e. Bitcoin) or cash subscriptions and is held in the form of GBTC. The lock-up period is six months, and it can be bought and sold through the OTC Market when it expires.

Previously in 2019, a QDII fund wealth management product issued by Bank of China Fund, "Bank Global Strategy Securities Investment Fund (FOF)", also purchased 13,000 shares of GBTC worth 1.35 million yuan.

BlockBeats has compiled a list of institutions that recently disclosed that they still hold GBTC:

Three Arrows Capital, which holds the most GBTC, is a hedge fund established in Singapore in 2012. It mainly invests in infrastructure, decentralized financial projects and derivatives platforms in the field of cryptocurrency. At the same time, Three Arrows Capital is also a shareholder of BlockFi, the second largest institution holding GBTC. BlockFi is a crypto asset lending platform that completed a $30 million Series B financing in February 2020. According to BlockFi CEO Zac Prince, BlockFi will be listed as early as the second half of 2021.

In addition, ARK, a fund managed by Catherine Wood, known as the "female version of Buffett", invested in GBTC as early as 2015, and its "Next Generation Internet ETF" ARKW has increased its holdings of 780,000 GBTC shares in the past month, worth more than 35 million US dollars. ARKW ranks sixth among global ETFs with a total investment return rate of 555.79% in the past five years. Among them, GBTC is its third largest holding, accounting for 4.73% of its total funds.

The hedge fund Horizon Kinetics ranks second to ARK in holding GBTC shares. Five trust funds (KINETICS PORTFOLIOS TRUST) and one closed-end fund (RENN Fund) under Horizon Kinetics all hold GBTC, with a total of 5.18 million GBTC shares, worth about $230 million. In addition to purchasing GBTC, Horizon Kinetics also participates in Bitcoin mining, hosting its mining machines at Core Scientific, which has a mining farm with a power load of 450 MW.

It is worth noting that Rothschild Investment Corp, an investment company under the well-known Rothschild family, also indirectly holds Bitcoin by holding GBTC.

Conclusion

In 2020, more and more institutions and companies began to accept and purchase Bitcoin. Bitcoin's influence on the world is also growing. However, Bitcoin's influence on the world is still not comparable to that of gold. According to the value of global gold reserves, the price of one Bitcoin needs to rise to $380,000 to be equivalent to gold.

The rush of institutional enterprises has made it difficult to judge whether this is a hype among institutions or a return to the value of Bitcoin. The capital market will never lack perpetual motion machines, it’s just a matter of how long they last.

Bitcoin is like a social experiment, and each business that buys Bitcoin may have different ideas. Each business is just choosing the world it wants with the money in its pocket.