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/
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