Bitwise chief funding officer Matthew Hougan believes that firms including Bitcoin (BTC) to their steadiness sheets are not an anomaly however a burgeoning megatrend that would 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 a further $42 billion to proceed its purchases.
Hougan famous that the pattern 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 steadiness sheets.
These firms maintain 141,302 BTC mixed, whereas non-public companies reminiscent of SpaceX and Block.one have disclosed a minimum of 368 BTC in holdings.
Regulatory shifts
In accordance 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 file income when Bitcoin’s value rises.
Beforehand, Bitcoin was handled as an “intangible asset,” forcing firms to jot down down its worth if the value 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 rely of 70 might develop to a whole lot, even hundreds, 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 in opposition to 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 fluctuate, he believes the inflow of company demand has the potential to drive Bitcoin costs considerably larger, 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.