South Korea’s NPS Injects $33.7M in MicroStrategy for Bitcoin Exposure

South Korea’s National Pension Scheme (NPS) bought a $33.7 million stake in MicroStrategy (MSTR) in the second quarter. This comes to 245,000 shares, 0.04% of the NPS’s direct US equity holdings. This follows NPS’s plan to invest in cryptocurrency markets through traditional public companies.

South Korea’s NPS Buys MicroStrategy Shares

NPS’s purchase of MicroStrategy shares is just one way the agency is entering the Bitcoin market. MicroStrategy is the largest institutional investor in Bitcoin, holding over 1% of the total Bitcoin supply. This investment indicates that NPS is leaning toward the possibility of Bitcoin through investment in an organization like MicroStrategy.

MicroStrategy’s stock has risen by 92% in the year, most of which was realized in the first quarter. NPS may be planning to buy these shares with the hope of making profits in the future, as it did with Coinbase. The NPS purchased 282,673 shares of Coinbase (COIN) during the third quarter of 2023 when the prices had risen significantly, and this might show that the NPS is expecting the same for MicroStrategy.

MicroStrategy as the Bitcoin Proxy Company

MicroStrategy has gradually become the representative of Bitcoin investments, primarily for institutional investors. The U.S. Securities and Exchange Commission recently gave the green light to a leveraged MicroStrategy ETF (MSTX) issued by Defiance, which delivers 175% of the daily stock return. This ETF allows investors to invest in Bitcoin with leverage through an SEC-approved financial product.

MSTX is being launched when institutional interest in Bitcoin is on the rise. MicroStrategy is one of the biggest holders of Bitcoin, and the new ETF adds to its position as the conduit for institutional investors interested in leveraging Bitcoin. Since Bitcoin ETFs become more popular, it may bring interest to MicroStrategy stock due to investors seeking exposure to Bitcoin but indirectly.

Institutional Investors Embrace Bitcoin ETFs for Exposure

The NPS’s investment in MicroStrategy continues the institutional embrace of Bitcoin ETFs and other products. Spot Bitcoin ETFs have given institutional investors a way to get exposure to the Bitcoin market through regulated products. Some U.S. state pension funds have also expressed interest in these instruments.

For example, the State of Wisconsin Investment Board (SWIB) disclosed this week that it has a significant allocation to the BlackRock Bitcoin ETF. SWIB has been allocating funds to Bitcoin ETFs for two consecutive quarters to capture the increasing institutional demand. Likewise, the State of Michigan Retirement System revealed that it had bought $6.6m in the ARK 21Shares Bitcoin ETF (ARKB) the previous month.

Jersey City Mayor Steven Fulop has also revealed his plans to use ETFs to invest in Bitcoin, thus showing the growing trend of adopting Bitcoin as a form of investment. These are signs of an increasing interest among larger investors, such as pension funds, in using regulated financial instruments to get exposure to Bitcoin.