The infinite QE initiated by the Fed is only one of the tools used to support an economy that is on the verge of one of the greatest depressions ever. The initiative in finding safe assets to invest in is slipping into dangerous territory in which the stock market is almost completely managed by central banks with companies that have crazy prices. The idea that Bitcoin can enter the reserves of a bank is still far from real implementation, but the first steps have already been taken in 2020 and will certainly continue in 2021.
Morgan Stanley and indirect exposure to Bitcoin
2021 begins precisely with news that may initially seem harmless but in the background describes what in effect may become a trend in the coming months and years. Morgan Stanley, in fact, a well-known merchant bank based in New York, has submitted to the SEC a form in which it claims to own 792,627 shares of MicroStrategy, one of the first companies to invest in Bitcoin. MicroStrategy CEO Micheal Saylor is one of the idols of Bitcoiners as well as a huge proponent of the revolutionary potential of this technology. In 2020 alone, Saylor’s company invested over one billion dollars in Bitcoin, undoubtedly becoming the beacon for all other companies looking for an investment to diversify their portfolio.
Is the interest of the banks increasing?
Morgan Stanley with this move has increased the starting position by 360% from Q3 of 2020, indirectly demonstrating an interest in Bitcoin. The bank now owns nearly 11% of MicroStrategy, giving a strong signal to the rest of the industry. MicroStrategy’s shares are strongly correlated with the price of Bitcoin and this move is intended as indirect exposure to the asset that for now remains far from the banking system. The one started by the US bank can be a fundamental move, demonstrating the interest it has gained in what is the best performing asset of recent years in any time frame. As previously mentioned, the exposure is certainly indirect as Bitcoin remains an enemy of the traditional financial system. Like Morgan Stanley, Banca Generali in recent months has concluded an investment of 14 million in Conio, the Italian startup that offers wallet services on the cryptocurrency. The direction in this sense seems very clear: for all banks the day in which we will see BTC in reserve funds remains far away, but the exposure to the asset is significantly increasing indirectly.
CBDC and the digital dollar plan
Investments in companies and services of this kind will increase considerably from this year on, leading banks to experience more and more what appears to be a difficult enemy to overcome. In fact, it is not surprising that the wave of institutions that started in the second half of 2020 has reached Wall Street where now banks are also starting to invest in companies directly related to BTC but at the same time regulated and secure. In addition, on January 4, the news came out that the OCC (Office of the Controller of the Currency) gave the green light to the National and Federal Banks to manage payment circuits based on Blockchain technology and Stable coins. This move serves to incentivize the development of the digital dollar and the famous CBDC (Central Bank Digital Currency) to complete the transition to a cashless company. The development will still take a long time but the experimentation period has arrived. Bitcoin, the Blockchain, and the Stable coins are no longer new but will soon enter everyday life.