London News – An investor report released by Geoffrey Kendrick, head of digital asset research at Standard Chartered Bank, on May 20th pointed out that Sovereign wealth funds and state-owned institutions are increasingly gaining exposure to Bitcoin by holding MicroStrategy (MSTR) stocks rather than spot Bitcoin ETFs. Regulatory filings show that such indirect investment has been the main driving force for sovereign capital to increase its holdings of Bitcoin in the past quarter.
Indirect investment surges: MSTR serves as a “bridge” for institutional capital
The report shows that although the market focused on Wisconsin in the United States reducing its holdings of 3,400 Bitcoin-equivalent ETFs, public institutions in countries such as Norway, Switzerland, and South Korea collectively increased their exposure by over 1,600 bitcoin-equivalent shares by purchasing MSTR stocks in the first quarter of 2025. The state pensions of California, New York and North Carolina in the United States have also increased their holdings of 1,000 bitcoin-equivalent assets through the MSTR, in sharp contrast to Wisconsin’s withdrawal.
Kendrick pointed out: “The 13F document reveals an important trend – institutional investors view the MSTR as a structural bridge to enter the Bitcoin market.” Currently, MicroStrategy holds 576,23 Bitcoins, accounting for 2.9% of the total in circulation. Its stock has become the most compliant Bitcoin investment tool, apart from ETFs.
Direct ETF allocation divergence: Middle Eastern capital increases holdings against the trend
While indirect investment is heating up, sovereign capital’s attitude towards spot ETFs shows regional differentiation. The sovereign fund of ABU Dhabi directly increased its holdings of Bitcoin equivalent assets by 300 through ETFs, bringing its total holdings to 5,000. The central bank of Saudi Arabia has for the first time established a small allocation through ETFs. Kendrick analyzed that the “petrodollars” of Middle Eastern countries are accelerating their rebalancing towards crypto assets, while institutions in Europe and the United States are more inclined to diversify risks through the equity of listed companies.
The sovereign allocation logic of Bitcoin has shifted from “speculative experiments” to “strategic reserves”. The report shows that in the first quarter of 2025, the equivalent assets of Bitcoin held by global sovereign capital (including MSTR, ETFs, and spot) increased by 18% quarter-on-quarter, among which indirect investment contributed 72% of the increase.
Path selection driven by regulation
Kendrick believes that regulatory uncertainty is the key factor driving institutions to shift to MSTR. The SEC of the United States has long held a cautious attitude towards the approval of spot Bitcoin ETFs. However, as a listed company, MSTR’s accounting treatment, auditing process and information disclosure of its Bitcoin holdings are more in line with the traditional financial regulatory framework. For sovereign wealth funds that need to pass annual audits, the compliance advantages of the MSTR are significant. He pointed out.
In addition, MSTR’s “Bitcoin + leverage” business model (raising Bitcoin holdings through bond issuance) provides institutions with additional risk-return characteristics. Data shows that the 60-day rolling correlation between MSTR’s share price and Bitcoin’s price is 0.92, but its volatility is 35% higher than that of Bitcoin, attracting sovereign investors seeking excess returns.
Market Impact and Future Outlook
If sovereign capital continues to increase its holdings through MSTR, it may intensify the “institutional siphon effect” in the Bitcoin market. The Standard Chartered model shows that if existing sovereign investors increase their Bitcoin allocation ratio from the current 0.3% to 1%, they need to increase their holdings by approximately 120,000 Bitcoins, with 70% likely to be completed through the MSTR channel. This will lead to an additional 45% increase in the MSTR stock price compared to the current level (assuming a Bitcoin price of $100,000).
Background extension: Since MicroStrategy launched its “Bitcoin Treasury” strategy in 2020, it has become the world’s largest holder of Bitcoin among publicly traded companies. Its business model has sparked regulatory controversy – the US Treasury Department once questioned its accounting treatment of Bitcoin as an “intangible asset with an unlimited lifespan”, but the SEC has not yet filed a formal accusation against it. Kendrick predicts that as sovereign capital holdings increase, the compliance of the MSTR will become a key variable influencing the regulatory narrative of Bitcoin.
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