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24 October 2020

The next big treasure: Corporations buy up Bitcoin as a treasury reserve

The next big treasure: Corporations buy up Bitcoin as a treasury reserve


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Edward Moya, a senior market analyst at Oanda — a forex trading company — told Cointelegraph that the COVID-19 pandemic has changed the macro backdrop for fiat currencies, adding: “The Fed, in particular, has clearly signaled an ultra-accommodative monetary stance will remain in place for a few years, and that is making many institutional investors scramble for alternative investments.”.

In the past, companies could hold their reserves in government bonds and be reasonably sure of outperforming the consumer price index (CPI) — i.e., inflation.

A $50-million investment in BTC may seem modest for a firm whose market capitalization now surpasses Goldman Sachs’, but most analysts expect that crypto investment will grow.

Its Cash App service enables users to buy and sell Bitcoin, and some analysts believe other payment firms will now have to facilitate crypto investment in some form — or risk being left behind.

Institutional investors, too, will have to find new ways to diversify their portfolios and maximize balance sheet returns?

They’ve all expanded their offerings to include digital assets and this trend is growing,” Cappelli told Cointelegraph.

Moya told Cointelegraph that hedge funds and institutional investors will be more likely to have around 1% exposure to cryptocurrencies

Publicly held corporations, for their part, “will be more interested in creating their own cryptocurrencies, but the regulatory battle that hit Facebook’s Libra project has demotivated many companies.” He added: “Eventually, a large company will take a decent-sized investment, and that should be enough to force other firms to follow suit.”

Reflecting on the recent public-firm announcements, Ammous told Cointelegraph: “What was most interesting for me about the MicroStrategy and Stone Ridge purchases is that these are not companies that deal with Bitcoin as part of their core business, and yet they chose to place the majority of their corporate reserves in Bitcoin, not just a small fraction.”

No more than that could ever be minted, and that appears to have served Bitcoin well in the time of COVID-19

As Ammous told Cointelegraph, “There seems to be a growing recognition that the strictly limited supply of Bitcoin gives it a good chance at maintaining its value well into the future.”

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