Investment giant Vanguard is profiting from the recent Bitcoin price surge through its substantial holdings in MicroStrategy (MSTR) shares, despite the firm’s public stance dismissing Bitcoin as an investment.
Vanguard holds approximately 20 million shares of MicroStrategy within its passive index funds. This significant position allows the firm to benefit indirectly from Bitcoin’s appreciation, as MicroStrategy’s primary strategy involves aggressive Bitcoin acquisition and its stock price is heavily correlated with the cryptocurrency’s value.
This indirect exposure stands in contrast to Vanguard’s public statements. Senior executives have consistently criticized Bitcoin, labeling it an ‘immature’ asset class lacking intrinsic value. Furthermore, Vanguard notably does not offer its clients access to spot Bitcoin ETFs.
MicroStrategy’s stock price surged nearly 17% over the past month, directly increasing the value of Vanguard’s assets under management (AUM) tied to these holdings. This contradiction has drawn criticism from industry figures, including Matthew Sigel, Head of Digital Assets Research at VanEck, who highlighted the inconsistency of Vanguard publicly dismissing Bitcoin while simultaneously investing heavily in a company whose value proposition is intrinsically linked to it.
Vanguard’s situation exemplifies a broader trend where passive index investing strategies can create unintended exposure to cryptocurrency-related assets, forcing traditional financial institutions to reconcile their public narratives with the realities embedded within their investment portfolios.