In today’s discussion, Marissa Kim from Abra Capital Management explores the increasing trend of treasuries incorporating bitcoin as a reserve asset. Then, Peter Gaffney shares insights from his recent experience and discussions at the Cboe RMC conference in Ask an Expert.
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The corporate world is witnessing a shift towards embracing bitcoin as a treasury asset, with U.S. Senator Cynthia Lummis proposing a bill for the Treasury Department to buy 1 billion bitcoins over the next five years. This move towards legitimacy is driven by economic, geopolitical, and regulatory factors. Public and private companies now hold over 4% of all bitcoin, valued at around $50 billion, with MicroStrategy leading the way.
Many firms are turning to bitcoin as a treasury reserve asset due to its potential as a reliable store of value, especially when compared to the depreciating U.S. dollar. By replacing cash with bitcoin, companies can improve their balance sheet evaluations. Bitcoin’s fixed supply cap and lack of long-term dilution make it an attractive savings asset for corporations looking to preserve value over time.
However, volatility remains a significant concern for companies considering adding bitcoin to their balance sheets. To manage risks, many companies allocate only a portion of their treasury to bitcoin to balance potential returns with price fluctuations. Bitcoin is also seen as a safeguard against geopolitical uncertainty due to its hard-coded inflation rate and independence from central bank policies.
Different non-crypto-native firms are utilizing bitcoin in various ways, from family offices integrating it into treasury strategies to small and medium-size businesses using it as collateral for loans. As bitcoin gains acceptance as a treasury reserve asset, we can expect more widespread corporate adoption across industries.
In the Ask an Expert section, emerging product themes such as yield products within ETF wrappers and the role of digital assets in providing income to investors are discussed. Digital assets play a crucial role as a macro hedge or standardized global currency, with many advisors and money managers considering allocating a portion of client assets to blue-chip cryptocurrencies.
Paying attention to real-world asset trends is essential as portfolio management moves towards digital experiences. Advancements in tokenization are making it possible to manage various asset classes in one place, showcasing the importance of asset aggregation across service providers.
The opinions shared in the Ask an Expert column are solely those of the author and do not represent Blue Water Financial Technologies Services LLC. As the adoption of bitcoin as a treasury reserve asset continues to grow, businesses across industries are actively incorporating digital assets into their financial strategies.