Crypto Assets Index Investment: An Unexpected Development

A fascinating phenomenon has emerged in today's US stock market: investors are willing to buy $1 worth of Crypto Assets at a $2 stock valuation. This seemingly irrational trading pattern was initially pioneered by a company that currently holds about $70 billion in Bitcoin, while its market capitalization is around $138 billion. Nowadays, more and more small companies are beginning to follow this practice, and it seems to be yielding good results.

This phenomenon raises a thought-provoking question: why is the stock market willing to pay 2 dollars for a Crypto Asset worth 1 dollar? There are mainly three explanations for this:

1. The Crypto Assets held by enterprises are more valuable than those held by individuals, as companies can leverage these assets for more operations, such as educating investors, lending, and leveraging.

2. A large amount of institutional capital wants to invest in Bitcoin, but due to various restrictions, they cannot hold it directly or invest through conventional means. Therefore, they are willing to invest indirectly through these "crypto vault companies," even if it requires paying a premium.

3. Retail investors may lack judgment and blindly follow stocks labeled "crypto treasury," unaware that they are actually purchasing crypto assets at high prices.

Although every company performing this operation emphasizes the first interpretation, the second interpretation may actually be closer to the truth. For example, a large asset management company holds 6.99% of a Crypto Assets vault company as the second largest shareholder. This may be because the funds under the company can only invest in stocks and cannot directly purchase Bitcoin or Bitcoin ETFs.

Interestingly, a well-known index fund company, despite publicly criticizing Crypto Assets, has become the largest shareholder of a "Bitcoin shadow company." This company owns nearly 8% of the A-class common stock of this Crypto Assets vault company, distributed across dozens of index products covering various investment styles.

This phenomenon reflects the essence of passive investment in index funds: they do not buy what fund managers want to buy, but rather what the market wants to buy. Nowadays, the market seems to be gradually accepting Crypto Assets.

While some may not wish for Crypto Assets to appear in their stock index funds, the core idea of index funds is to believe in the market's choices. In 2005, the market portfolio was mainly composed of stocks and bonds; by 2025, Crypto Assets are likely to have become an indispensable part of it.

For those who do not want to choose their own investment targets, the simplest method is to buy the entire US stock market index. As more and more "crypto vault companies" are included in the stock market, this method will naturally provide investors with exposure to Crypto Assets.