BNY Mellon Regrets Not Buying MicroStrategy's Stock for Bitcoin (BTC) Gains

BNY Mellon has attributed the underperformance of its small-cap exchange-traded fund (ETF) to its failure to add the stocks of bitcoin-linked firms such as MicroStrategy, choosing to invest in gold instead. 

Missed Opportunity

In its Certified Shareholder Report of Registered Management Investment Companies (Form N-CSR) filing with the U.S. Securities and Exchange Commission (SEC), Bank of New York Mellon (BNY Mellon), America’s leading investment banking services holding company with over $1.9 trillion in assets under management, has declared that it’s DSCVX Fund would have performed better if the company had purchased MicroStrategy’s stock.

Specifically, BNY Mellon’s Opportunistic Small Cap Fund (DSCVX) gained 35 percent from September 2020 to February 2021. However, the fund failed to reach the 41.7 percent profit generated by its benchmark, the Russell 2000 index, in the same period.

In its Form N-CSR filing, the firm notes that things would have been much greener if it had purchased MicroStrategy’s stock, as the firm’s share price has surged massively since it started buying bitcoin last year.

“Fund performance was hurt as well by a decision not to own MicroStrategy, whose stock surged when it announced it had invested in bitcoin,” declared the firm.

Bitcoin Linked Firms Continue to Soar

Wary of the burgeoning digital asset class, HSBC, the largest bank in Europe, recently barred its clients from buying the stocks of MicroStrategy due to the company’s affinity for bitcoin (BTC), the world’s flagship cryptocurrency, whose more than $1 trillion market cap has now dwarfed that of some large banks globally.

“HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from digital currencies,” declared HSBC at the time.

Despite the lack of support from mainstream financial institutions like HSBC, the stocks of crypto and blockchain-linked companies have continued to outperform the Standard & Poors 500 Index, with firms like Marathon Digital Holdings and Riot Blockchain occupying the frontline.

Unlike HSBC, BNY Mellon is making plans to dive deeper into the world of cryptocurrencies by launching a bitcoin and altcoins custodial service for its clients. 

In the same vein, MicroStrategy has made it clear that its board of directors will start receiving their fees in bitcoin (BTC), as part of the company’s strong commitment to the digital currency 

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