Morgan Stanley's $500 Million Microstrategy Bet a "No-Brainer," According to Expert

Key Takeaways

  • Morgan Stanley has reportedly invested $500 million in Microstrategy, which converted its entire cash balance to Bitcoin in 2020.
  • Ben Miller of Miller Value Partners explains why putting cash balances in Bitcoin is a no-brainer.

Morgan Stanley’s approximately $500 million investment in Microstrategy Inc. may come as a surprise to many. Not veteran investor Ben Miller, however.

That’s because betting on Microstrategy in the current era is also a bet on Bitcoin.

Buy MSTR, Buy Bitcoin

Microstrategy Inc. was one of the first companies to begin transforming heaps of cash to Bitcoin. 

By October 2020, the business intelligence company has converted 100% of its cash balance to BTC, totaling $475 million. Later Microstrategy raised $650 million in senior convertible notes to buy up even more. 

The American publicly-listed company has placed a levered bet on Bitcoin and currently holds over $2.8 billion BTC

Before 2020, the investment gurus and hedge funds would have derided such a move. However, things changed drastically in the pandemic-ridden year. 

And with Microstrategy leading the way, many brand name investors are following suit.

According to a Jan. 9 SEC filing, Morgan Stanley indirectly bet on Bitcoin after acquiring 792,627 Microstrategy shares (MSTR) before Dec. 31, representing 10% of the company.

Investing in a “No-Brainer”

Despite the drop in career risk, banks and larger companies are still concerned with the asset’s infamous volatility. This may soon change, however, according to experts.

Ben Miller, a co-founder at Miller Value Partners, explained since Bitcoin is still in its initial stages, price growth is good for decreased volatility in the future. Miller went as far as to say that “[Bitcoin] gets less risky, the higher it goes.”

He pointed out that investing in Bitcoin using a small portion of individual or company cash balance is a no-brainer in the current economic setup. The interest rates are at zero, while the long-term inflation expectation is 2%. He confirmed: 

“If you look at cash, it is a guaranteed loser by at least 2% a year.”

The cryptocurrency is currently trading at $40,311 with a total market capitalization of $749 billion. 

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