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MicroStrategy shares skyrocketed alongside the parabolic Bitcoin rally as investors rushed to gain exposure to the trending cryptocurrency any way they could. Banking on this demand, JP Morgan is planning to introduce a new investment product that is a basket of companies with some type of cryptocurrency market exposure.
Here’s a deeper look at what this new investment product from JP Morgan could entail according to an SEC filing, as well was what this could mean for the cryptocurrency industry.
JP Morgan Files With SEC To Build Crypto Exposure Basket Investment Product
This morning, news broke that JP Morgan had filed with the SEC its intention to create a new investment product that is essentially a weighted basked of companies with cryptocurrency exposure. The product is designed to provide investors with exposure to the highly volatile asset class indirectly, through companies that either hold BTC as part of their corporate treasury strategy, or whose revenue is tied to the crypto industry in some way.
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To little surprise, the Michael Saylor-led MicroStrategy makes up the largest share of the basket at 20%, with Square Inc, Riot Blockchain, and Nvidia making up 18%, 15%, and 15% respectively. The remaining 32% of the basket is comprised of the likes of AMD, PayPal, and CME Group, which each have ties to Bitcoin in various capacities.
MicroStrategy, Square, and PayPal’s entry into crypto are what sparked the initial bull market breakout, and the leading cryptocurrency has never looked back, growing from $200 billion to $1 trillion in market cap.
MicroStrategy shares have performed nearly as well as Bitcoin, prompting such demand | Source: MSTR on TradingView.com
Bitcoin Quickly Becoming The Corporate Treasury Asset Of Choice
MicroStrategy owns more than 90,000 BTC, and Square owns another 8,000. The rest of the players are either involved in cryptocurrency mining or exchange services. The new product is in response to surging demand for indirect exposure to cryptocurrencies, but at the same time is an indicator of where innovation lies in the tech world.
These tech brands aligning themselves with the cryptocurrency industry is not only benefiting them by boosting company revenues and treasury reserve balance sheets, but it is bringing added attention to the companies involved.
At the same time, these brands being aligned with the cryptocurrency industry and the fact that JP Morgan is responding to demand for such products seriously legitimizes Bitcoin and the rest of crypto.
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It is not clear if the number of companies included in the basket will expand, or if the weighting will change based on an algorithm or some formula. However, the impact of Michael Saylor’s corporate BTC-buying conference could result in several more major companies getting into crypto with a similar approach.
Not only could this change the shape of JP Morgan’s product in the future, as more and more corporations pile into Bitcoin, it could be the catalyst that sends the price per coin to hundreds of thousands, if not more.
Featured image from Deposit Photos, Charts from TradingView.com