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Michael Kern

Michael Kern

Safehaven

Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Macro-Investing.com.

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Corporate Bitcoin Holdings Boost Crypto Confidence

Bitcoin

Bitcoin may still be shy of its record high of $20,000 in 2017, but its pandemic-time recovery is making it popular among large companies.

The king of cryptocurrency has witnessed strong growth this year, record volume trading, and is still flirting with the $12,000 range, though it’s having trouble over the past couple weeks passing the $11,500 resistance level--a key figure crypto traders are monitoring right now. 

Many agree that bitcoin’s major upside over the last 10 years has largely been the result of FOMO, a fear of missing out, and even multi-billion companies have succumbed to the temptation.

Payment company Square is the latest. 

Earlier this month, the company said it bought 4,709 bitcoins, worth approximately $50 million, which represents about 1% of Square’s total assets.

“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose,” the company said in a release.

Square’s crypto investment, though, is a drop in the bucket compared to others’. 

In August, business analytics firm MicroStrategy put $250 million into bitcoin, becoming the first Nasdaq-listed company to adopt the cryptocurrency as a primary treasury reserve asset. They didn’t stop there. The following month, the company purchased  16,796 additional bitcoins at an aggregate purchase price of $175 million. Now they own $425 million in bitcoin

"This investment reflects our belief that bitcoin, as the world's most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash," MicroStrategy CEO Michael Saylor said in a statement. 

Also this month, $10-billion asset management giant Stone Ridge confirmed that it’s put $115 million into Bitcoin. 

But Grayscale (of the Grayscale Bitcoin Trust) maintains is the overall king of bitcoin holdings, with 449,596 BTC. That means it holds 2.14% of the digital world’s 21 million bitcoin supply. 

It’s a pretty solid argument that Bitcoin is gaining acceptance from the mainstream corporate environment, which holds more than 600,000 BTC on their balance sheets

Even with such sizable corporate bitcoin holdings, predicting the final outcome is as cryptic and the currency itself. 

Andy Edstrom of California-based WESCAP Group recently said that one bitcoin will be worth $400,000 by 2030. That means that it could become an $8 trillion asset, worth around the same as the entire gold market. 

A similar view has come from Germany’s largest lender, Deutsche Bank, which suggests that cryptocurrencies could replace cash payments within the next decade. 

Software businessman John McAfee predicted last year that the price of bitcoin would rise to $1 million by the end of 2020. But he’s now behind bars for fraud and even called his predictions a total “nonsense.” 

At the Davos, Switzerland, meeting last year, the top investor in the crypto space, Jeff Schumacher of BCG Digital Ventures, said bitcoin was a purely speculative asset with no underlying value and that it might even go down to a zero.

Take your pick, but big business is jumping on board anyway, and there’s no time like a pandemic. 

By Michael Kern for Safehaven.com

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