Are Coinbase shares an indirect way for institutions to invest in Bitcoin and other cryptos
The flow of institutional investment into the Bitcoin and cryptocurrency industry was a welcome change that marked the previous year. With industry behemoths like Microstrategy and Tesla going bullish on Bitcoin, there was no stopping other institutions to follow suit.
However, one deterrent to direct big-ticket institutional investment into Bitcoin has been its price volatility and lack of infrastructure. Ergo, institutions have found a way to reduce risk by pumping capital into public companies that are already heavily invested in the ecosystem.
According to JP Morgan’s latest SEC filing, its Large Cap Growth Fund owned 62,589 shares of Coinbase as of June 30. Coinbase is USA’s top cryptocurrency exchange. At the time of writing, one Coinbase share was worth $259.28, up 3.28% from the previous day. This way, JP Morgan’s total investment into the exchange amounted to over $16.22 million.
The exchange, which launched its IPO earlier this year, also has other big-name investors like Goldman Sachs and Ark Investment, which holds over 5.5 million Coinbase shares.
Coinbase had announced recently, its plans to invest $500 million dollars into Bitcoin, Ethereum, and other DeFi tokens, making it the first publicly listed company to hold all these assets on its balance sheet.
It is no secret then that institutions are loading up on Coinbase stocks to gain indirect exposure to Bitcoin and other crypto-assets while minimizing their risk and maximizing their profit. As the exchange registered a whopping $160 million in profits over the last quarter, it has come out as an alternative for investors to put big money into crypto.
In fact, even though Coinbase might be the go-to crypto investment for institutions, it is hardly alone in featuring on these high-value balance sheets. As Microstrategy continues to accumulate even more Bitcoin, companies like BlackRock are looking to diversify their crypto portfolios through indirect investments. It recently purchased $700 million worth of Microstrategy shares before delving into Coinbase.
Recently, Dave Nadig, who is the CIO and Director of Research for ETF Trends, had commented that while institutions wait for a Bitcoin ETF to gain direct exposure, they can “invest in the companies that are actually driving this digital transformation.”
Moreover, now that other crypto companies like Gemini and BlockFi are gearing up for their respective IPOs, following Coinbase’s blueprint might make it easier for them to rake in institutional capital. If these companies go ahead with the accumulation of Bitcoin and other cryptocurrencies, institutional demand for their shares could also be huge in the time to come.