Will Bitcoin ETF Sink MicroStrategy Stock?
Last Updated on 25 October 2021 by CryptoTips.eu
Michael Saylor, the CEO and founder of investment firm MicroStrategy, was defiant as ever when the Wall Street Journal this weekend placed a long-spun story on how financial advisors could soon be talking Bitcoin to all their US clients now that a Bitcoin ETF (exchange traded fund) was set to be launched.
Saylor claimed that:
There are approximately 218,000 financial advisers in the United States managing assets in excess of $110 trillion, and as of this week they can allocate client assets to Bitcoin via ETFs which integrate with their business model & information systems.
It followed another tweet in which he praised financial magazine Barron’s who are putting the Bitcoin ETF on their first page today.
#Bitcoin Goes Mainstream. pic.twitter.com/SIfrSj5NQc
— Michael Saylor⚡️ (@saylor) October 23, 2021
When gold investment was made possible via an ETF, its value skyrocketed, and many Bitcoin maxis (longtime bagholders who’ve been invested into Bitcoin ever since it traded for only a few dollars) are hoping this time will be no different.
The first signs that followed the announcement of a Bitcoin ETF had the world’s biggest crypto shoot up to $67,000, a new all-time-high. Analysts proclaim that a record of $100k before the end of the year should be possible. Shoulda, woulda, coulda of course, but hey, we’ll take that optimism.
Proxies
However, analysts also claim that the companies set to suffer from the introduction of a Bitcoin ETF would be MicroStrategy and Grayscale. They are known on Wall Street as Bitcoin proxies, or companies that you can invest in without getting into Bitcoin yourself. It is known that MicroStrategy has purchased large amounts of Bitcoin and that Grayscale is a longtime crypto investor, therefore classic Wall Street funds that do not want to be seen holding crypto accounts invest in those companies instead.
It has paid off for them as well, on a year-to-date basis, the stock of MicroStrategy’s is up some 90%, while shares of the Grayscale Bitcoin Trust are up by 53%. This while the price of Bitcoin itself, trading at $60,000 at the time of penning this article, is up some 120% since the beginning of 2021.
Problem for both companies is that investors can soon invest in the real thing, namely a Bitcoin ETF, and that analysts thus worry that we’ll see an outflow from both stocks into the Bitcoin ETF instead.
Already we wonder where MicroStrategy would invest in next if that happens. Saylor has always been known to be on the lookout for the next big thing in tech. From time to time he gets it wrong (check the dotcom crisis), but with Bitcoin he got it right (thus far).