Software intelligence firm MicroStrategy made one of the most daring investment moves of the year when it invested $ 250 million in bitcoin, buy about 0.1 percent of the total supply in August. The CEO, Michael Saylor, has doubled down the road in numerous public comments and earlier this month, the company raised $ 650 by offering convertible senior notes with plans to buy even more BTC.
But these moves cannot be made by Saylor alone. The company’s board and investors should also see the value in a transition to bitcoin. But who are these bullish investors? How did Saylor convince them to choose Plan B? And what does it mean for a group of Bitcoin enthusiasts in these institutional seats?
Who are the investors backing Saylor’s big game?
Russell Investment is MicroStrategy’s 8th largest shareholder, owning approximately 2 percent of the total shares. It recently increased this position by more than 70 percent, more than any other shareholder. Since 2018 it has been blogging bullishly on BTC, with quotation marks as: “While many are questioning the fundamentals of Bitcoin, perhaps more importantly, Bitcoin is questioning the fundamentals of central banks.”
Renaissance Tech (RenTech) is the company’s tenth largest shareholder. It has increased its position four times since June, which also happens to be the internal approval to start trading bitcoin futures.
This approval was around the time MicroStrategy publicly stated that it was considering investing in alternative assets. At this point, we can conclude that RenTech knew bitcoin was on the table and on board with the idea.
My personal favorite? The Citron Fund. It was publicly bearish for BTC for three years before reversing its position this fall, saying that in an investment memo MicroStrategy was the best Bitcoin exposure currently available in the public market.
Citron bought shares in MicroStrategy and set a new valuation of $ 700 per share. This is an increase of about 145 percent from the current price of $ 286.
BlackRock reduced its overall position by about 5 percent, but remained the largest shareholder at 15 percent. They are also the world’s largest asset manager, managing more than $ 8 trillion. The chief investment officer said last month that “Bitcoin is here to stay.”
The CEO went even further, saying Bitcoin could replace gold.
How are these investors convinced?
Saylor said it took about six months to get approval for the switch to bitcoin. Six months. To allocate $ 250 million to bitcoin. I expected at least 12 months.
Saylor has the majority of the voting shares and, at the end of the day, what he says goes. But it is also unlikely that he would make such a massive policy change without significant support. So how did Saylor convince the board and shareholders to support the move?
First, they were already open to it. Russell has been blogging since 2018, RenTech had already documented the recent interest in bitcoin trading. The quick timeline indicates that others were curious too. They don’t want to miss the boat, and the fact that Bitcoin has survived for 12 years shows that it isn’t just a fad.
Second, education about Bitcoin was crucial. Saylor has stated that this was part of the process and it shows. MicroStrategy has an entire section from its website dedicated to Bitcoin materials. And that education continues. On the “Investor Analyst DayLast month, Saylor answered 25 questions during a Q&A. Ten of them were Bitcoin-centric.
Finally, other options are missing. Many investment funds have charters that do not allow them to invest in cryptocurrencies. For others who can invest, they have mentioned concerns about safekeeping and safety. In principle, any fund may invest in stocks, but with the Grayscale Bitcoin Trust (GBTC) – the leading trust that provides exposure to the price of bitcoin through a traditional investment vehicle – you pay a premium over the price of bitcoin. MicroStrategy is the best of both worlds.
TL; DR: BlackRock, Russell and RenTech have probably all given their blessing on the move to bitcoin. If MicroStrategy proves to be a success, they can also use Saylor’s playbook to advocate for BTC with their other portfolio companies.
This is a guest post from Ellie Frost. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.