Vanguard Group, the $10 trillion asset management company, has long criticized Bitcoin for being unsuitable for long-term investments and lacking intrinsic value. But in a surprising revelation, Vanguard has become the largest shareholder of Strategy (formerly MicroStrategy) through its passive index strategy.
According to Bloomberg data, the company holds over 20 million shares, or about 8% of the company’s publicly-traded Class A shares, worth approximately $9.26 billion. This twist signifies the positions of some institutions in holding Bitcoin indirectly, and the changing perception surrounding digital assets. Critics haven’t stopped talking about the irony, given Vanguard’s historical stance on Bitcoin.
Vanguard Group Becomes the Institution with the Most Direct Bitcoin Exposure in Q4
The Bloomberg data compiled from regulatory filings percentage further reveals that the shares Vanguard Group owns range from indices tracking small- and mid-cap companies to value, growth, and momentum strategies. These shares combined make Vanguard the largest shareholder in the fourth quarter, surpassing Capital Group.
Vanguard’s rise to the top as the largest MSTR shareholder reflects the unintended effects of index investing. The company’s shares weren’t obtained from intentional bets on Bitcoin, but from passive managed index funds. After Strategy’s strategic pivot to Bitcoin, Vanguard’s stake ironically included BTC exposure via indexing.
MicroStrategy holds more than 600,000 BTC, worth about $70 billion, making it the largest corporate Bitcoin holder. Given that the company is deeply invested in BTC and trading on the Nasdaq, Vanguard’s funds must buy every stock in the tracked index, regardless of its views. This shows that sometimes, skeptics can be exposed to Bitcoin indirectly.
Passive Indexing Enhances Crypto Adoption, Grants Legitimacy
One of the implications of passive indexing is crypto adoption. As Bitcoin-linked companies make their way into major indices, trillions of dollars in passive funds flow into digital assets. Not only does this lead to stealth crypto adoption, but it also grants digital assets legitimacy.
Although Vanguard is a top MSTR shareholder, investors still can’t access BTC directly. It means they’d have to buy a BTC ETF to reduce direct exposure. Therefore, this investment product is as vital as ever and would contribute to mainstream crypto adoption. Traditional investors, who are skeptical about owning BTC directly, can purchase an ETF and enjoy passive income.
What’s Next for Strategy and Corporate Treasury Trends?
Michael Saylor said that Vanguard’s passive stake reflects the growing institutional support for Bitcoin and Bitcoin Treasury strategies. Although Vanguard Group’s CEO, Salim Ramji, continues to oppose crypto expansion, we could see more asset managers inadvertently gain exposure to these index funds.
Furthermore, companies like Tesla and Block may mirror Strategy in accelerating the trend of asset managers holding Bitcoin indirectly via their equity. Strategy itself will continue to receive massive inflows, thanks to this indirect exposure.
Vanguard’s unexpected rise to the top reveals crypto’s expansion in traditional finance and how companies can get indirect exposure to digital assets through passive indexing. It shows that even the most ardent critic can have access to crypto without owning it. The paradigm is changing, and everyone, one way or the other, will adapt to the digital asset era.
