Choosing stock of gold mining companies instead of shares of firms investing in bitcoin has caused an underperformance for BNY Mellon’s tech-focused funds. The giant US bank outlined MicroStrategy – the company owning over 90,000 bitcoins – as the biggest missed opportunity.
In recent filings with the US Securities and Exchange Commission, America’s oldest bank conceded that preferring to go with stocks of gold mining organizations instead of such investing in BTC harmed its funds’ performance in Q1 2021.
More specifically, BNY Mellon outlined the lack of MicroStrategy as the most significant missed opportunity:
“Fund performance was hurt as well by a decision not to own MicroStrategy, whose stock surged when it announced it had invested in Bitcoin.”
Michael Saylor’s business intelligence giant announced its first BTC purchase in August last year, and its stocks traded around $125 at that time. As the firm kept accumulating massive portions, leading to owning over $5 billion in bitcoin to date, the price of MSTR skyrocketed by roughly 10x to a new all-time high in mid-February.
Despite retracing to $655 since then, MicroStrategy’s shares are still more than 400% up since the first BTC buy. Simultaneously, the filings highlighted the fund’s position in Alamos Gold – a gold mining company – whose stocks fell from 14 CAD to around 10 CAD in the same timeframe.
“As for stock selection, a position in Alamos Gold, a gold mining company, hampered performance as shares were hurt by weak gold prices.”
The New York-based bank, also one of the largest custodians in America, has displayed a significantly favorable approach towards the cryptocurrency industry in the past few months.
CryptoPotato reported in February when the organization enabled its institutional customers to hold, issue, and transfer bitcoin and other digital assets. Shortly after, BNY participated in a Series C funding round for a cryptocurrency custodian and became the service provider for SkyBridge Capital’s Bitcoin ETF.
Moreover, the bank compiled report focused on bitcoin’s performance. By touching upon the popular stock-to-flow model, BNY predicted that the cryptocurrency could indeed surge to a six-digit price territory and even outplace gold as the most preferred store of value instrument.