Vanguard Group becomes the largest shareholder of Strategy, holding over 20 million shares of stock.

One of the world's leading asset management firms, Vanguard Group, has long maintained a cautious or even critical attitude towards Bitcoin and Crypto Assets, often labeling them as speculative and lacking Intrinsic Value. However, a recent development reveals an intriguing contradiction: Vanguard Group has quietly become the largest institutional shareholder of Strategy (MSTR). This Strategy is widely regarded as an alternative to Bitcoin, with its corporate strategy almost entirely centered on the holding and accumulation of Bitcoin. This investment not only starkly contrasts with Vanguard Group's publicly stated position but also highlights the complex tension created by passive index investment strategies between TradFi and emerging Crypto Assets.

Vanguard Group's "Contradiction" Investment: From Criticism to Largest Shareholder

According to a report by Bloomberg, Vanguard Group currently holds over 20 million shares of Strategy, accounting for nearly 8% of the company's Class A common stock. This investment has allowed Vanguard Group to surpass Capital Group Cos., becoming the largest shareholder of this Bitcoin company (Strategy has transformed from a business intelligence company into one of the most well-known Bitcoin asset holders, with over 601,550 Bitcoins held as of July 15), and could solidify this leading position in the fourth quarter.

This development stands in stark contrast to Vanguard Group's long-standing position on digital assets. Executives at this $10 trillion fund have repeatedly stated that Bitcoin is not "suitable" for long-term investors, labeling it as an "immature asset class" with "no intrinsic economic value." They have also described crypto assets more as speculation rather than investment, warning of their volatility and the risks they pose to portfolio stability.

2. The "Unexpected" Consequences of Passive Index Investing

However, the reason why the Vanguard Group was able to accumulate a large number of shares in the Strategy is not due to an active strategy shift, but rather through its passive index investment strategy. Industry analysts point out that passive index investing may have unintended consequences, which could force companies like Vanguard to invest in assets they publicly criticize.

Bloomberg pointed out that this irony highlights the broader tension between index-based strategies and the positive ideological stance of asset managers. With nearly $9 billion in Strategy stocks linked to index funds, some critics argue that this situation exposes the contradictions of TradFi.

Matthew Sigel, head of digital asset research at VanEck, referred to it as "institutional dementia" in a social media post, criticizing the company for publicly mocking Bitcoin while simultaneously increasing its exposure to Bitcoin through indexing. This contradiction raises the question: can institutional finance continue to philosophically resist Crypto Assets while still being subject to automated investment authorizations, which have different interpretations in capital allocation?

3. The "passive" integration of TradFi and Crypto Assets

The case of Vanguard Group vividly illustrates the complex mindset of the TradFi world in the face of the rise of Crypto Assets. On one hand, they may hold a conservative attitude towards Crypto Assets due to considerations of risk control, regulatory compliance, or established investment philosophy; on the other hand, market changes and the proliferation of passive investment tools have inadvertently forced them to increase their exposure to Crypto Assets.

This also reflects that as Crypto Assets such as Bitcoin are gradually integrated into mainstream financial products (like ETFs and corporate balance sheets), even the most conservative institutions find it difficult to completely avoid associations with them. This "passive" integration may suggest that the position of Crypto Assets in the financial system is being solidified in a more subtle manner.

Conclusion:

The event of Vanguard Group becoming the largest shareholder of Strategy is not only an interesting episode in the Crypto Assets market but also a microcosm of the challenges faced by TradFi institutions in the digital asset era. It reminds us that market evolution often exceeds expectations, and rigidity in investment strategies can lead to missed opportunities or unexpected outcomes. As the influence of Crypto Assets continues to grow, TradFi institutions will have to reassess their stance on digital assets and seek more flexible and pragmatic strategies to cope with this ever-changing financial landscape.