03 / 22 / 21

What is Bitcoin’s role on corporate balance sheets

We are in the middle of the second major crypto bull run ever since the launch of the first cryptocurrency and this time, it’s not just the hype. In fact, it is worth noticing that the momentum is very well supported by institutional investors, which is a positive indicator of cryptocurrency’s massive adoption rate. Although there are thousands of options for everyone to invest in, the mainstream institutions are more inclined towards Bitcoin – of course, it is the trendsetter and all coins follow the direction.

According to a report published by Arcane, the corporates have not entered the niche for pump and dump and they seem quite eager to hold the asset for the long term, thus skyrocketing the price of Bitcoin in the near future and shifting the support level upwards.

Just to clue you in about the recent massive purchases, MicroStrategy and Tesla have bought $5B and $1.5B worth of Bitcoin in the last 3 months alone. With increasing long-term positions, it is quite clear that the trend initiated by MicroStrategy has quickly gone Global as Fidelity Investments, BlackRock, Standard Chartered, Square, and Goldman Sachs have also joined the marathon.

Since BTC’s price has quadrupled in one year, the sooner a company started HODLing, the mightier their balance sheet is at the moment and it’s expected to grow in the long run as well.

Another major reason as to why crypto adoption is increasing and the balance sheets are reflecting major holdings in cryptos is because of the new regulations. Previously, the governments were not even considering making the crypto space regulated. However, the landscape has changed quite drastically in the last few years, particularly in the US where it has become incredibly easier for the corporates to hold Bitcoin and then file taxes as well. Since the latest regulations allow banks to get involved with cryptocurrencies as well, all the stakeholders can get involved (even the end-user) and foster the creation of new use cases.

Moreover, the custody and asset management niches are also growing and new regulations are being introduced which are paving way for more institutional adoption. Although these regulations are at a very early stage and would keep on evolving for the next few years, they have provided the necessary fueling to corporate investors.

It should also be noted that most of the corporate organizations reflecting BTCs on their balance sheets are either in the US and Canada and only a small number is located elsewhere, including Australia and Germany. So, the main bulls are concentrated in North America and this is one of the reasons why a single tweet from that region could shake up the entire market. However, from a different perspective, this “inclination” towards the North American market is positive for the blockchain industry as it would curb the mining monopoly established by China, and thus, more regions would get involved.


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