Bitwise Chief Funding Officer Matthew Hougan believes that corporations including Bitcoin (BTC) to their stability sheets is not an anomaly however an rising megatrend that would remodel the crypto market this yr.
In a current memo To purchasers, Hougan identified that MicroStrategy made headlines with its aggressive BTC accumulation technique. The corporate has acquired roughly 257,000 BTC, greater than all Bitcoin mined final yr, and plans to boost an extra $42 billion to proceed its purchases.
Hougan famous that the development extends properly past MicroStrategy. As of January 14, 70 publicly traded corporations, together with well-known names like Tesla, Block, and Mercado Libre, held Bitcoin on their stability sheets.
These corporations collectively maintain 141,302 BTC, whereas non-public corporations akin to SpaceX and Block.one have disclosed a minimum of 368 BTC in holdings.
Regulatory adjustments
In line with Hougan, the sport changer is the introduction of ASU 2023-08 by the Monetary Accounting Requirements Board (FASB). This rule permits publicly traded corporations to mark their Bitcoin holdings at market worth, permitting them to document income when the value of Bitcoin rises.
Beforehand, Bitcoin was handled as an “intangible asset,” forcing corporations to write down down its worth if the value fell, however not permitting them to acknowledge positive factors when it rose.
With reputational dangers reducing and the accounting panorama extra favorable, Hougan predicts an explosion within the variety of corporations buying Bitcoin. He estimates the present variety of 70 might develop to a whole lot, if not hundreds, within the subsequent 12 to 18 months.
Moreover, Hougan argues that companies purchase Bitcoin for a similar causes as people. Some see it as safety in opposition to the depreciation of the greenback, others as a speculative asset to drive up inventory costs, and nonetheless others as a sign of innovation to draw prospects and skills.
Whereas motivations differ, he believes the inflow of company demand has the potential to drive Bitcoin costs considerably larger, particularly as main gamers like Meta and others think about coming into.
Hougan concludes the paper by saying that retail traders don’t want to grasp why every firm buys Bitcoin. As an alternative, they need to ask themselves the place this demand goes and what it means for the market.
