South Korea's NPS Buys MicroStrategy Shares as Bitcoin Proxy Company

South Korea’s National Pension Scheme (NPS) bought a $33.7 million stake in MicroStrategy (MSTR) in the second quarter.

South Korea’s National Pension Scheme (NPS) purchased a $33.7 million stake in MicroStrategy (NASDAQ:MSTR) in Q2 2023. This equates to 245,000 shares, or 0.04% of NPS’s direct US equity holdings. The purchase is part of NPS’s broader strategy to gain exposure to cryptocurrency markets through traditional public companies.

MicroStrategy is the largest institutional investor in Bitcoin, holding over 1% of the total supply. The company’s stock has risen by 92% over the past year, largely due to its Bitcoin investment. NPS may be hoping to capitalize on this performance, especially given its previous purchase of Coinbase (NASDAQ:COIN) shares when prices had risen significantly.

As the leading proxy company for Bitcoin investments, MicroStrategy is now being used by institutional investors to gain indirect exposure to the cryptocurrency. The recent approval of a leveraged MicroStrategy ETF (NYSE:MSTX) by the U.S. Securities and Exchange Commission provides investors with another option for investing in Bitcoin through an SEC-approved financial product.

The institutional embrace of Bitcoin ETFs and other products continues with NPS’s investment in MicroStrategy. Institutional investors are now able to gain exposure to the Bitcoin market through regulated products, thanks to the launch of spot Bitcoin ETFs. Some US state pension funds have already disclosed their substantial allocations to these instruments.

For instance, the State of Wisconsin Investment Board (SWIB) has been allocating funds to Bitcoin ETFs for two consecutive quarters to capture the increasing institutional demand. The State of Michigan Retirement System also revealed that it had purchased $6.6m in the ARK 21Shares Bitcoin ETF (NYSE:ARKB) the previous month.

Moreover, Jersey City Mayor Steven Fulop has expressed his intention to use ETFs to invest in Bitcoin, highlighting the growing trend of adopting Bitcoin as a form of investment among larger investors such as pension funds.

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