• Team Sygnum

Digital Nugget: November 2020



The fast growing Bitcoin Treasuries of non crypto firms



What is happening?

For the first time, non crypto native businesses started using bitcoin in their Treasury operations. Square, MicroStrategy, Stone Ridge, Snappa, Tahinis Restaurant, FRMO Corp, Mode Global have all announced either a principal holding, or a portion of the treasury assets held in bitcoin.

Why are they doing this?

The catalyst was the fragile macro backdrop, the extraordinary money printing of central banks, and negative outlook for the global economy affecting all but safe haven assets. As MicroStrategy put it “we are sitting on a $500m ice cube about the melt”.

The companies used the following justifications: “dollar hedge”, “appreciating asset in an environment of yield dearth”, “counterparty risk of the banking sector”, “sufficiently mature and usable” (Square called bitcoin a “ubiquitous currency”).

Is this to start of more to come?

This is likely as the reasons for these companies’ actions are very valid and are not going away, and signalling by the first few gives confidence for others to follow.


The rhetoric from StoneRidge was very significant: “the DOLLAR depreciated 70% vs bitcoin”.[1] It also goes hand-in-hand with other forms of mainstream adoption of bitcoin taking off – such as the PayPal announcement with bitcoin increasingly accepted not just as a store of value but a payment mechanism, and institutional investors increasingly signalling their intention to embrace crypto in their investment portfolios.


Conclusion

These are signs that the floodgates are beginning to open to mainstream adoption of crypto assets, which would lead to steep appreciation in the price of bitcoin.

As the global economy is facing unprecedented challenges, the global financial system is fragile, and major fiat currencies are in danger of losing a lot of their value, we are moving towards a paradigm where it is more risky NOT to hold crypto assets

BTC YTD: +138.4%

MOON ETP of original protocols (incl BTC) YTD: +149.2%

Close of 27.11.2020



[1] https://coinmarketcap.com/headlines/news/stone-ridge-asset-management-joins-microstrategy-square-holds-115-million-bitcoin/



Disclaimer

This document was prepared by Sygnum Bank AG. This document may contain forward looking statements and may be subject to change. The opinions expressed herein are those of Sygnum Bank AG, its affiliates and partners at the time of writing. The document is for informational purposes only and contains general material. It is for use by the recipient only. It does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum Bank AG to purchase or sell assets or securities. It is not intended to be used as a general guide to investing, and should be used for informational purposes only. When making an investment decision, you should either conduct your own research and analysis or seek advice from an expert to make a calculated decision. The information and analyses contained in this document have been compiled from sources believed to be reliable. However, Sygnum Bank AG makes no representation as to its reliability or completeness and disclaims all liability for losses arising from the use of this information.

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