Key Points
- South Korea’s National Pension Service (NPS) purchased $33.7 million of MicroStrategy shares in Q2 2023, expanding its indirect exposure to Bitcoin.
- This move follows the NPS’s previous investment in Coinbase shares, signaling a growing trend of institutional investors entering the cryptocurrency market.
NPS Expands Crypto Portfolio
According to a recent filing with the Security and Exchange Commission (SEC), the National Pension Service of South Korea, the world’s third-largest pension fund by assets, has moved significantly into cryptocurrency. In the second quarter of 2023, the NPS purchased 24,500 shares of MicroStrategy Inc., valued at $33.7 million. This investment is part of the fund’s strategy to increase its indirect exposure to Bitcoin.
MicroStrategy, a business intelligence firm, is known for its substantial Bitcoin holdings. It currently owns 226,500 BTC worth approximately $13.2 billion. As the largest corporate Bitcoin holder, MicroStrategy’s stock is often considered a proxy for Bitcoin exposure in traditional markets.
Growing Institutional Interest in Crypto
The NPS’s investment in MicroStrategy is not its first foray into crypto-related assets. In the third quarter of 2022, the pension fund purchased 282,673 Coinbase shares worth $19.9 million. The latest filing shows that as of June 2023, the NPS held 229,807 Coinbase shares, valued at about $51 million.
This trend of institutional investors entering the crypto market is further exemplified by the U.S. Securities and Exchange Commission’s recent approval of the first leveraged exchange-traded fund targeting MicroStrategy.
Performance and Volatility
The investment comes when both MicroStrategy and Coinbase stocks have shown significant growth. MicroStrategy’s stock has risen 92% year-to-date, while Coinbase’s stock has seen a 25% increase.
However, it’s important to note that Bitcoin’s performance heavily influences MicroStrategy’s stock price, leading to significant volatility. This volatility has sparked debate about the appropriateness of allocating pension funds to such assets, with critics raising concerns about potential risks to pensioners’ retirement savings.
As institutional interest in cryptocurrency continues to grow, the financial world watches closely to see how these investments will perform and their impact on the broader market. The NPS’s move represents a significant step in major financial institutions’ mainstream adoption of crypto-related investments.
