Hundreds Of Companies Will Buy Bitcoin Over The Next 12-18 Months: Fund CIO

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As a financial analyst, I recently came across an intriguing perspective in a memo penned by Matt Hougan, the Chief Investment Officer at Bitwise, dated January 13, 2025. In this document, he posits that the practice of corporations investing in Bitcoin for their treasuries is more prevalent and impactful than many investors might assume. According to his viewpoint, a significant number of companies are expected to acquire Bitcoin within the next 12-18 months, which could propel the entire Bitcoin market to new heights.

An Overlooked Trend,” suggests that while MicroStrategy and its vocal CEO, Michael Saylor, frequently grab attention, they represent only the prominent face of a swiftly growing corporate wave investing in Bitcoin.

Although MicroStrategy ranks 220th in global market capitalization, which is slightly larger than Chipotle and slightly smaller than Sherwin-Williams as per Hougan’s assessment, MicroStrategy’s purchases of Bitcoin far surpass the total amount of new Bitcoin mined last year.

In the previous year, MicroStrategy acquired approximately 257,000 Bitcoins, which is greater than the estimated total amount of Bitcoin that will be mined in 2024 (approximately 218,829 BTC), as stated by Hougan. Additionally, he mentioned that MicroStrategy has indicated intentions to amass funds exceeding $42 billion for buying more Bitcoin, which is roughly the equivalent of “nearly 2.6 years’ worth” of newly mined Bitcoin at current production rates.

Hougan wonders aloud about potential outcomes when “large corporations begin emulating MicroStrategy’s strategies,” with special attention drawn to Facebook’s Meta Platform (which is 20 times larger than MicroStrategy).

As a researcher, I’ve been closely observing the market, and while MicroStrategy’s strategic decisions have undeniably grabbed headlines, it’s essential to note that a significant number of other companies are integrating Bitcoin into their financial portfolios. In fact, a remarkable 70 publicly traded companies now hold Bitcoin on their balance sheets. This diverse group includes not only crypto-focused firms like Coinbase and Marathon Digital but also mainstream entities such as Block, Tesla, Semler Scientific, Mercado Libre, and more.

Apart from MicroStrategy, these businesses collectively possess approximately 141,302 Bitcoin. Additionally, private companies hold substantial amounts of Bitcoin as well. According to Hougan’s data from BitcoinTreasuries.com, companies like SpaceX and Block.one together own at least 368,043 Bitcoin. This is a considerable amount, implying that MicroStrategy makes up less than half of the corporate Bitcoin market currently. However, as time passes, MicroStrategy’s portion “will likely become a minor fraction” of the overall corporate Bitcoin market.

Why Bitcoin Corporate Adoption Is Set To Explode

Hanover underscores the two primary hindrances traditionally impeding corporate assimilation – the fear of damage to reputation and inopportune financial regulations – and elucidates how both factors have undergone swift transformations.

Last year, the CEO of a large publicly traded company struggled immensely to incorporate Bitcoin into their treasury assets due to concerns about unfavorable media coverage, potential shareholder lawsuits, and regulatory scrutiny. However, in the last few months, these reputation risks have noticeably decreased. Following the election, with top-tier Washington officials showing increased interest in cryptocurrencies, owning Bitcoin has become increasingly common and popular.

Subsequently, the speaker emphasizes a fresh accounting regulation by the Financial Accounting Standards Board (FASB), referred to as ASU 2023-08. Earlier, Bitcoin was categorized as an “intangible asset” undergoing impairment testing, which meant that companies had to lower the value of their Bitcoin holdings if its price decreased, but they were unable to increase the valuation even when prices rose. Now, these firms can revalue Bitcoin based on current market prices and record a profit when the price increases.

If 70 firms considered including Bitcoin in their financial records despite the fact that its value might decrease, one can only wonder how many more would consider this move today, Hougan penned. Could it be 200, 500, or even 1000 companies?

As a researcher delving into the subject, I find myself echoing Hougan’s perspective when it comes to understanding why corporations decide to invest in Bitcoin. The reasons, much like those driving individual investors, can be quite diverse.

Some companies are enticed by the potential for financial gain – the allure of profit drives them to make such a move. Others, however, express concerns about the perceived debasement of traditional fiat currencies and see Bitcoin as a viable alternative. Yet, there are those who view Bitcoin as a symbol of innovation and modernity, seeking to align themselves with the technological advancements embodied by this digital currency – they wish to be seen as part of the Bitcoin community. Lastly, some corporations might simply follow their instincts, sensing an opportunity or a trend that could potentially benefit them in the future.

In the end, Hougan emphasizes that it’s more crucial to focus on the total demand rather than delving into each company’s reasons. Essentially, he suggests examining the numbers and pondering two questions: Where does this corporate demand appear to be heading? And what implications could that have for the market?

According to Hougan’s memo, it predicts an optimistic outlook, suggesting that if significant companies adopt the strategy used by MicroStrategy, and with a more advantageous reputation and accounting environment now in place, a large amount of corporate capital could drive Bitcoin’s price upward during the next year.

According to Matt Hougan, the Chief Investment Officer at Bitwise, it’s likely that around 100 to 300 businesses will invest in Bitcoin by storing it as part of their financial reserves within the next year and a half.

At press time, BTC traded at $95,039.

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2025-01-14 16:12