Up with MicroStrategy, down with grayscale
Last year, as the Bitcoin bull market raged to parabolic heights, funds owned by Morgan Stanley began buying shares in Grayscale Bitcoin Trust (GBTC) in relatively large volumes. At one point, funds managed by Morgan Stanley owned as much as 13 million GBTC shares. The Morgan Stanley funds currently hold about 11 million shares with a loss of at least 33%.
The firm started buying GBTC in 2019, but bought the majority in last year’s bull market. Some of the investment company’s funds have also recently sold some of their GBTC at a loss. In fact, funds managed by Morgan Stanley holding GBTC are down this year with the Morgan Stanley Insight Fund Cass A down more than 50%.
The fund started the year with 1,734,013 shares and sold 332,627 at the start of the bear market. It then sold 183,457 shares at a loss in the second quarter, ending with 1,217,929 GBTC shares.
But despite buying the Bitcoin peak and holding the GBTC bag, Morgan Stanley appears to have cashed in on the Bitcoin bull market with another one of its trades. As of 2020, the company had purchased more than 10% of MicroStrategy, which ended the year with 845,786 shares. It sold most of these shares in 2021 when MicroStrategy’s price rose parabolically along with Bitcoin.
As of today, Morgan Stanley appears to own a small amount of MicroStrategy stock in its funds, with Morgan Stanley Insight Fund owning up to 41,508 shares, and Morgan Stanley Institutional Fund Trust owning 25,469.
Morgan Stanley has too acquired $9,702,000 in MicroStrategy bonds with a coupon of 6.125%, due June 15, 2028. The value of the MSTR bonds is down from principal and is currently valued at a total of $8,392,675.
Read more: Are major players such as Grayscale and MicroStrategy moving the price of bitcoin?
Morgan Stanley’s foray into Bitcoin may not be a short-term opportunistic bet, as the firm has made various positive comments about Bitcoin and crypto in recent years. Some of Morgan Stanley’s wealth managers seem to believe that Bitcoin and crypto are here to stay, describing the digital currency as “a likely permanent investment category” and “a viable asset class” with potential growth.
In June last year Morgan Stanley argued that Bitcoin and cryptocurrencies are traded as speculative assets, but did not rule out the possibility that crypto could become conventional currency in the future. Morgan Stanley has also claimed it is interested in buying El Salvador’s debt despite being weighed down by its own Bitcoin venture.
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