In a surprising move, top players in the global banking sector, including BlackRock, Bank of America (BOA), and Fidelity, have reportedly been quietly accumulating significant amounts of Bitcoin and related assets, even as regulatory scrutiny on cryptocurrency exchanges intensifies. The first quarter of 2023 saw record purchases of Bitcoin and MicroStrategy (MSTR) stocks by these industry giants, signaling a growing interest in the digital currency market.
BlackRock, with assets under management totaling over $8 trillion, along with BOA and Fidelity, has strategically acquired substantial holdings in MicroStrategy, which boasts the largest institutional Bitcoin holdings of 140,000 BTC valued at more than $3 billion. This investment trend has raised questions about why major institutions are backing equities tied to Bitcoin amidst ongoing legal actions by the SEC against exchanges like Binance and Coinbase.
The answer lies in the absence of a Bitcoin exchange-traded fund (ETF) in the United States. Buying MSTR stocks allows these US-based investors to gain exposure to the price of Bitcoin indirectly. Bank of America, the second-largest US bank, notably increased its exposure to MSTR by a staggering 47,800% in Q1 2023, while BlackRock holds a stake three times larger, accounting for 6% ownership of MSTR valued at around $156 million.
Fidelity, managing over $4.5 trillion in assets, has also significantly raised its stake in MicroStrategy by 28,000%. The interest in Bitcoin is not limited to the US alone, as Canada’s sixth-largest bank reportedly acquired MicroStrategy stocks worth over $500,000.
Despite Bitcoin’s 60% price decline in early 2023, these banks appear to be following a positive market outlook. Speculations arise as to whether they are aligning with the $700 billion bank’s recent prediction of Bitcoin hitting $100,000 by 2024. Only time will reveal the long-term strategies and outcomes of these prominent institutions in the ever-evolving Bitcoin landscape.