Bitcoin As a Treasury Asset: Companies Add BTC to Treasury for Long-Term Potential

Industry observers have noticed a trend among big companies like Tesla and CoinBase: they are adopting Bitcoin as a treasury asset. This shift among private and publicly traded companies has led to discussions among industry experts. The BIT Journal, through available data, provides an overview of the long-term potential of this crypto update. 

MicroStrategy’s Influence

A notable name in this sector is MicroStrategy. The company has allegedly accumulated over 1% of the Bitcoin supply. According to reports, MicroStrategy has 226,331 BTC at the moment and has become a key stakeholder. Even though MicroStrategy stands so high, other companies with smaller Bitcoin holdings exert influence in the industry. Some of the companies listed by Nasdaq are said to include crypto exchange platforms like CoinBase and miners like CleanSpark. Non-crypto companies like Tesla, Semler Scientific, Mercado Livre, and Meitu also hold Bitcoin on their balance sheets. These companies have about 3.87% of Bitcoin’s total supply. 

Adopting Bitcoin as a Treasury Asset

According to data, the U.S. Federal Reserve aims to manage inflation at 2% annually. Digital currencies like Bitcoin and Ethereum (BTC ETH) have policies that contrast with traditional policies. 

Bitcoin has shown a low correlation with other assets like Ethereum and other altcoins. In the latest crypto news, a Binance spokesperson mentioned that “Given Bitcoin’s low correlation to the performance of traditional asset classes, such as equities and bonds, Bitcoin may look attractive to institutional investors as an addition to their investment portfolio and hedge against traditional market volatility, thereby spreading risks while potentially enhancing portfolio performance.” According to the spokesperson, stable regulatory laws will lead to growth, innovation, and long-term trust from investors. 

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Managing Bitcoin’s Volatility

Bitcoin (BTC) has much potential, but investors are concerned about its volatility. The price swings can be sporadic, which is common among crypto assets. In a crypto update from The BIT Journal, Arina Dudko, head of corporate payment solutions at Cex.io, stated: “Just looking at Bitcoin’s price chart reveals a series of peaks and valleys that illustrate its erratic trading value in a rollercoaster that is well-known to crypto enthusiasts, but could startle business investors who measure success a quarter at a time.” This can be troubling for investors. 

A certain level of stability is required for assets like Bitcoin and Ethereum (BTC ETH). According to BitPay Zielke, companies are adopting Bitcoin as a treasury asset risk short-term loss and accounting complexities. Zielke also pointed out the setbacks of Bitcoin (BTC), referencing the Mt. Gox and FTX collapse; he noted that Bitcoin “rallied back every time” and that the “financial rewards are clear and obvious.”

Zielke also mentioned that companies adopting Bitcoin as a treasury asset are “positioning themselves as titans of the future,” Dudko advises these companies to do adequate research before allocating resources to Bitcoin. Quoting Dudko, “To avoid falling into dire financial straits, it could be wise for companies to consider how they would fare if BTC gained or lost double-digit valuations given its proven volatility.”

Schlaufman from DeFI Technologies pointed out that DeFI manages the risks of holding a volatile asset like Bitcoin as a treasuring asset. He said they maintain such an asset by creating a diversified balance sheet for U.S.D, BTC ETH, and venture investments. Schlaufman mentioned that DeFi will “continue to purchase Bitcoin as we are able to,” hoping it will be profitable in the long run. 

Conclusion

Records suggest that there has been a massive adoption of Bitcoin as a treasury asset. Experts say this will alter Bitcoin and lead to nuances in the financial industry. However, analysts are still unsure how this will influence the culture in the cryptocurrency world. The strong commitment by these companies reflects their belief in the potential of Bitcoin. Due to unpredictability and volatility, companies are adding BTC to their balance sheets. The uncertainty of the digital asset is the most pressing challenge; however, investors seem not to be worried about this, casting their hope in its long-term potential. Analysis shows that more companies are set to adopt Bitcoin as a treasury asset once it is more stable.