Bitcoin arms race, IShares Bitcoin Trust rises, MicroStrategy
One of the biggest stories in the market so far this year was the first spot introduction of a Bitcoin exchange-traded fund (ETF). The first 11 ETFs to invest directly in Bitcoin rather than Bitcoin futures have opened up the assets to a whole new segment of the investing public. It is probably no coincidence that Bitcoin has soared since its launch on January 11th.
Among the new funds, iShares Bitcoin Trust (NASDAQ:IBIT) is the fastest growing, already having approximately $13.2 billion in assets under management. It surpassed the $10 billion asset mark faster than any other ETF in U.S. history.
iShares Bitcoin Trust was the largest institutional holder of Bitcoin as of March 8 after recent purchases brought its total to about 196,000. However, Bitcoin’s largest corporate owner MicroStrategy (NASDAQ:MSTR) has now joined the Bitcoin arms race.
MicroStrategy adds 12,000 Bitcoins
Business intelligence company MicroStrategy has been buying Bitcoin at a rapid pace since 2020, when it made the strategic decision to use Bitcoin as its primary treasury reserve asset.
Earlier this month, it offered about $800 million in convertible bonds to buy more Bitcoin and add to its growing portfolio. At the time, there were 193,000 bitcoins, but on March 11, the company announced another purchase higher than the iShares Bitcoin Trust.
In a press release, MicroStrategy executives said the company has completed an $800 million offering and generated $782 million in net proceeds from the sale of the notes. As management previously stated, the funds will be used to purchase additional Bitcoin.
In a post to The price per Bitcoin was $68,477.
This increases MicroStrategy’s total size to 205,000, making it again the largest institutional or corporate owner of Bitcoin. In total, MicroStrategy invested $6.91 billion in Bitcoin at an average price of $33,706 per Bitcoin.
The acquisition makes MicroStrategy one of the biggest gainers on the stock market on Monday. On this day, the stock price soared about 13% to $1,611 per share. MicroStrategy stock has been on a rocket ship thanks to its Bitcoin holdings, with the stock up a whopping 135% year to date from $685 per share at the start of the year.
During that time, the price of Bitcoin has hit an all-time high, currently sitting at $72,520 as of 12 PM ET on Monday. Bitcoin price has risen about 65% YTD from approximately $44,172 per Bitcoin on January 1st. It rose more than 5% on Monday, surpassing $70,000 for the first time.
For iShares Bitcoin Trust, it won’t be long before it chases MicroStrategy and makes its next Bitcoin purchase. The iShares Bitcoin Trust ETF rose about 5% on Monday, hitting $41.51 per share, up about 49% since it launched Jan. 11 at about $27.94 per share.
The Bitcoin boom in 2024 was largely fueled by institutional interest and expanded access to the asset through ETFs. With Bitcoin ETFs being added to more platforms and cryptocurrency prices soaring, it’s unlikely interest will slow down anytime soon.
This interest has also influenced the next Bitcoin halving event scheduled for April. Halving is a mechanism that attempts to control the supply of Bitcoin being mined, typically causing demand to increase as supply decreases.
As with any investment, especially one as volatile as Bitcoin, investors should exercise caution and consider any type of aggressive growth investment as a relatively small part of a diversified portfolio.
