Hidden Encryption Assets in the US Stock Market

An interesting phenomenon is unfolding in the US stock market: investors are willing to pay 2 dollars for a stock valued at 1 dollar in encryption. What logic is hidden behind this seemingly irrational pricing?

This trend was first pioneered by a company called Strategy. The company holds about $70 billion in Bitcoin, while its market value is as high as $138 billion. Nowadays, more and more small companies are following this model and achieving good results.

There are mainly three explanations for this phenomenon:

1. Businesses holding encryption currencies are more valuable than individuals. Companies can utilize these assets for more operations, such as educating investors, lending, leveraging, etc.

2. Institutional investors have a demand for cryptocurrencies, but are unable to purchase them directly due to various reasons. Therefore, they are willing to invest indirectly through the stocks of these "cryptocurrency vault-type companies," even if it means paying a premium.

3. Retail investors blindly follow the trend, not realizing that they are actually buying encryption assets at a high price.

Among them, the second explanation is the most thought-provoking. Taking Strategy as an example, its second largest shareholder is the traditional fund management company Capital Group, which holds 6.99% of the shares. In the past year, the stock price of Strategy has risen by about 175%, far exceeding the 13% increase of the S&P 500 index.

So, why doesn't Capital directly buy Bitcoin but instead pays double the price to buy shares of Strategy? The reason may be that Capital's Growth Fund of America can only invest in stocks and cannot directly purchase Bitcoin or Bitcoin ETFs. Therefore, for fund managers looking to gain exposure to encryption, buying shares of Strategy may be the only viable option.

Interestingly, the largest shareholder of Strategy is actually Vanguard. This giant, which manages $10 trillion in assets, has consistently held a critical attitude towards encryption assets. However, due to the passive investment nature of index funds, Vanguard has now become the largest shareholder of Strategy, holding nearly 8% of Class A common stock.

This phenomenon reflects an important trend: encryption currencies are gradually integrating into traditional financial markets. Even those large asset management companies that are skeptical of encryption assets have to indirectly hold these assets through index funds.

For ordinary investors, this means that even without directly purchasing encryption currencies, merely by holding U.S. stock index funds, they may have unknowingly gained exposure to encryption assets. This trend may continue to develop, and future "market portfolios" are likely to include more encryption components.

Regardless of individual attitudes towards encryption currency, the market's choice has become very clear. In this rapidly changing financial world, maintaining an open and adaptable mindset is becoming increasingly important.