Up to now, we have seen the likes of Microstrategy and Square as forerunners in adding Bitcoin to their company treasuries. Now that Tesla has done the same thing, and on an even larger scale, has that opened the door for corporations across the globe to follow suit?
Yesterday’s news that Elon Musk’s Tesla had bought $1.5 billion in Bitcoin may well have forced the treasurers of large institutions worldwide to think again about gaining themselves exposure to such a potentially profitable asset.
This acquisition by the fourth largest company in the world may well have done just that. Strategists at Fundstrat Global Advisors agreed:
“We see fundamental reasons for corporate crypto treasury exposure and expect others to follow suit,”
“We don’t think this happens overnight, but we do think there’s much more room for corporate treasury penetration and expect the trend to continue.”
High profile investors such as Paul Tudor Jones and big-league companies such as PayPal have also added to the interest around Bitcoin, along with Elon Musk’s Tesla, helping to send Bitcoin to its recent new all-time-high of $48,000.
The potential for investment into Bitcoin from just US blue-chip companies is simply huge, and would dwarf that of Tesla. According to Bloomberg data, around $2.79 trillion is sitting in the treasuries of the S&P 500 companies.
However, as a counter-argument, James Angel, associate professor at Georgetown University, states that corporate acquisitions of Bitcoin are “risky”, stating that:
“Bitcoin is highly volatile and can easily go up or down 10% in a day or 50% in a year -- certainly not a good short-term store of value.”
The likes of Microstrategy CEO, Michael Saylor, would certainly disagree. He recently hosted a seminar for around 1400 corporate entities, and shared his views on why these companies might benefit from Bitcoin on their balance sheets.
Of course, the cherry on top of the pudding would be Apple. Rumours are already abounding. Mitch Steves from RBC Capital Markets, when talking about the potential of an investment from Apple, stated:
“if the firm purchased $5 billion of bitcoin (20-25 days of cash flow), the price of the underlying asset would need to rise by 10% for the firm to fully fund the entire project in the first place," the analysts wrote. "This is a solid value proposition in our view as the business would be funded without diluting any other projects at the firm."
Are the floodgates about to open for corporate investment into Bitcoin? The next few months could be very interesting on this topic.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.