Bitwise chief funding officer Matthew Hougan believes that firms including Bitcoin (BTC) to their stability sheets are not an anomaly however a burgeoning megatrend that might remodel the crypto market this yr.
In a current memo to shoppers, Hougan highlighted that MicroStrategy has been making the headlines with its aggressive BTC accumulation technique. The corporate has acquired roughly 257,000 BTC, greater than all of the Bitcoin mined final yr, and plans to boost an extra $42 billion to proceed its purchases.
Hougan famous that the development goes far past MicroStrategy. As of Jan. 14, 70 publicly traded firms, together with family names like Tesla, Block, and Mercado Libre, maintain Bitcoin on their stability sheets.
These firms maintain 141,302 BTC mixed, whereas personal corporations equivalent to SpaceX and Block.one have disclosed no less than 368 BTC in holdings.
Regulatory shifts
In keeping with Hougan, the game-changer is the Monetary Accounting Requirements Board’s (FASB) introduction of ASU 2023-08. This rule permits publicly traded firms to mark Bitcoin holdings to market worth, enabling them to document income when Bitcoin’s value rises.
Beforehand, Bitcoin was handled as an “intangible asset,” forcing firms to put in writing down its worth if the worth fell however not permitting them to acknowledge positive aspects when it elevated.
With reputational dangers declining and the accounting panorama extra favorable, Hougan predicts an explosion within the variety of firms shopping for Bitcoin. He estimates that the present depend of 70 may develop to tons of, even 1000’s, within the subsequent 12 to 18 months.
Moreover, Hougan argues that firms purchase Bitcoin for a similar causes people do. Some see it as a hedge towards greenback depreciation, others as a speculative asset to spice up inventory costs, and others as a sign of innovation to draw prospects and expertise.
Whereas motivations range, he believes the inflow of company demand has the potential to drive Bitcoin costs considerably greater, notably as main gamers like Meta and others ponder entry.
Hougan concludes the doc by saying that retail traders don’t want to grasp why each firm is shopping for Bitcoin. As a substitute, they need to ask themselves the place this demand is heading and what it means for the market.
