Will South Korea’s Big Bet on MicroStrategy Pay Off Like Coinbase?
South Korea’s National Pension Scheme (NPS) recently purchased 245,000 shares of MicroStrategy (MSTR) in the second quarter of this year. Valued at 46 billion won or about $33.7 million, this investment represents 0.04% of NPS’s total direct investment in U.S. stocks. This move follows NPS’s previous investment in Coinbase, reflecting a growing interest in cryptocurrency-related assets.
NPS’s Investment Strategy
The NPS’s investment in MicroStrategy comes after a successful purchase of Coinbase shares in 2023. At that time, NPS acquired 282,673 shares of Coinbase (COIN) at $78 per share. By the end of Q2 2024, Coinbase’s price had surged to $222, tripling in value. This raises the question of whether NPS expects a similar outcome with MicroStrategy.
MicroStrategy as a Bitcoin Proxy
MicroStrategy is a major corporate holder of Bitcoin, owning over 1% of the total Bitcoin supply. Recently, the U.S. Securities and Exchange Commission (SEC) approved a leveraged ETF, MSTX, which aims to deliver 175% of MicroStrategy’s daily stock return. This ETF offers investors a high-leverage way to gain exposure to Bitcoin through a regulated vehicle.
Trends in Bitcoin Investment
The introduction of spot Bitcoin ETFs has provided a regulated way to invest in Bitcoin. Consequently, several U.S. state investment boards have increased their Bitcoin exposure. The State of Wisconsin Investment Board (SWIB) has been actively investing in Bitcoin ETFs, while the State of Michigan Retirement System recently invested $6.6 million in the ARK 21Shares Bitcoin ETF (ARKB). Jersey City Mayor Steven Fulup has also expressed interest in Bitcoin ETFs.
South Korea’s National Pension Scheme’s investment in MicroStrategy aligns with a broader trend of institutional investment in cryptocurrencies. As Bitcoin and other digital assets gain traction, these strategic moves by NPS and U.S. state investment boards highlight the growing integration of digital assets into traditional financial portfolios. Whether NPS will see similar success with MicroStrategy as it did with Coinbase remains to be seen, but the increased interest from institutional investors underscores the significant role of digital assets in the financial landscape.
