Vanguard is now the largest shareholder of Bitcoin-heavy MicroStrategy

Vanguard now owns more of MicroStrategy than anyone else. That’s the same Vanguard that called crypto “speculative,” said it had “no place” in long-term portfolios, and blocked Bitcoin ETFs from being traded on its platform.

Yet somehow, it’s ended up holding more than 20 million shares of a company whose entire business is buying Bitcoin. That’s nearly 8% of all Class A stock, according to data from Bloomberg.

But this didn’t happen because Vanguard changed its mind. It happened because it stuck to its indexing strategy. Vanguard tracks indexes. Strategy got added to the Nasdaq 100. That means Vanguard bought the stock. Now, Vanguard is indirectly pumping billions into Bitcoin — not because it wants to, but because index funds don’t care what a company does, as long as it’s in the index.

MicroStrategy, now simply called “Strategy,” just bought another 4,225 Bitcoin last week. The purchase, filed with the U.S. Securities and Exchange Commission on Monday, totaled $472 million at an average price of $111,827 per coin. This latest haul pushed the company’s total Bitcoin stack past $73 billion, which is about 2.8% of the total supply that will ever exist.

Strategy has been buying Bitcoin nearly every week. It raised the $472 million by selling preferred shares through an at-the-market program — not common stock this time. These preferred shares don’t expire, and they pay dividends, making them more appealing to certain investors. The entire raise from last week went straight into buying Bitcoin. And it’s paying off. Bitcoin hit $123,000 just yesterday.

Vanguard builds a $9.26B stake it didn’t even want

While Strategy is out there chasing satoshis, Vanguard is doing what it always does: buying shares in any stock included in its tracked indexes. That strategy made it the largest shareholder of Strategy, with a total stake now worth about $9.26 billion. Its biggest holding is in the $1.4 trillion Total Stock Market Index Fund (VITSX), which owns 5.7 million shares, or around $2.6 billion.

Other major holdings include the Vanguard Extended Market Index Fund (VIEIX), with 3 million shares, and the Vanguard Growth ETF (VUG). Even active funds like VSEQX and VFMO hold Strategy stock, though Vanguard says those positions came from quantitative models, not from any belief in Bitcoin. Still, it’s exposure.

The contradiction is brutal. This is the same Vanguard whose former CEO Tim Buckley said in 2023, “We don’t believe it belongs,” when talking about Bitcoin. He added, “It’s really tough to think about how it belongs in a long-term portfolio.” But thanks to how indexing works, Vanguard now owns a huge chunk of the most Bitcoin-heavy stock on the market.

“God has a sense of humor,” Eric Balchunas from Bloomberg Intelligence said. “Vanguard chose this life. When you have an index fund, you have to own all the stocks, for better or worse.”

Strategy’s 3,300% rise forces exposure on legacy giants

Since mid-2020, when Michael Saylor kicked off his Bitcoin buying spree, Strategy’s stock has exploded. It’s up over 3,300%. Bitcoin, by comparison, is up around 1,000% in that same timeframe. The S&P 500? Just 115%.

Saylor himself owns just under 20 million shares of Strategy, according to its latest proxy filing. He’s used both debt and equity to fund Bitcoin buys. This model — raise capital, buy Bitcoin, repeat — is now being copied by other companies that want to mirror Strategy’s growth.

Balchunas, who wrote “The Bogle Effect,” said there’s something “very Vanguardian” about Saylor’s hold-tight strategy. “He says he’ll never sell his Bitcoin,” Balchunas noted. That mindset, buy and hold through anything, happens to match the passive investing philosophy Vanguard was built on.

Strategy isn’t even part of the S&P 500, but because it was added to the Nasdaq 100, Vanguard had to buy it. And once Bitcoin took off again, Strategy’s value soared. Its stock jumped another 3.2% on Monday alone, when Bitcoin hit that $123,000 peak.

With the latest buy, Strategy now holds more than 2.8% of all Bitcoin that will ever exist, locked up in a single company’s treasury. No other corporation comes close. The company’s market cap is now $121 billion.

Even though Vanguard has zero interest in crypto directly, it’s now deeply tied to it. “Even though Vanguard hasn’t embraced crypto directly, many of its clients are getting indirect exposure through MicroStrategy in Vanguard’s passive indexes,” said Roxanna Islam from ETF shop TMX VettaFi. “That shows how embedded crypto has become in traditional indexes and client portfolios, sometimes without many even realizing it.”

Saylor, of course, saw it as validation. “The fact that Vanguard holds such a large stake in Strategy is a powerful signal of growing institutional support for Bitcoin and for Bitcoin Treasury strategies,” he said. “It reflects the increasing acceptance of Bitcoin as a legitimate reserve asset within the traditional financial community.”

This whole thing just shows what happens when Bitcoin becomes too big to ignore. Even the people who said “it doesn’t belong” are now holding it, whether they like it or not.

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