BNY Mellon has acknowledged that the choice of shares of gold mining companies instead of companies investing in bitcoin has led to a low return on some of its offered funds.
In a recent filing with the US Securities and Exchange Commission (SEC), America’s oldest bank admits that its choice of gold mining stocks instead of bitcoin-investing companies was detrimental to mutual fund returns in the first quarter of 2021.
Specifically, BNY Mellon described the lack of MicroStrategy shares as the most important opportunity it missed:
“The return on equity was also negatively affected by the decision not to own MicroStrategy, whose share rose when it announced it had invested in bitcoin.”
Michael Saylor’s business intelligence company announced its first bitcoin purchase last August with its shares trading at around $125 at the time. As the company continued to accumulate huge amounts of bitcoin, reaching more than $5 billion worth of bitcoin to date, the share price of MicroStrategy rose by about 10 times, reaching a new all-time high in mid-February.
Despite the fact that the MSTR price has fallen to $655 since then, MicroStrategy shares are still more than 400% since the time of the first bitcoin market.
At the same time, the adverse effect due to the position of the fund in Alamos Gold is underlined.
“In terms of stock selection, a position in Alamos Gold, a gold mining company, hampered performance as its shares were affected by low gold prices.”
BNY, however, has approached the cryptocurrency space very favourably, enabling its institutional clients to own, issue and transfer bitcoin as well as other digital assets. It also provides services to SkyBridge Capital for its tradable bitcoin mutual fund.
In addition, the bank drafted a report focusing on bitcoin performance. Referring to the popular stock-to-flow forecasting model, BNY predicted that the iconic cryptocurrency could indeed rise in a six-digit price range and even surpass gold as the most preferred value storage medium.