The Megatrend of Treasuries Purchasing Bitcoin: A New Economic Paradigm

Bitwise CIO, Matt Hougan, recently wrote a short memo identifying the growth of companies purchasing Bitcoin on their balance sheets and made the bold prediction that he expects to see hundreds of companies join the trend to buy Bitcoin over the next 12-18 months. In this blog I will summarise a few of Hougan’s key points and explain further why I am aligned with Hougan’s belief of future growth in Bitcoin treasuries. 

 

The MicroStrategy Effect:

MicroStrategy, under the leadership of Michael Saylor, has been a trailblazer in the movement of purchasing Bitcoin for company treasuries. In 2024 alone, the company purchased 257,000 Bitcoins, surpassing the total amount of Bitcoin mined in the same period (218,829). This action alone demonstrates how a single corporate entity can significantly influence the supply dynamics of Bitcoin. The question then arises: what happens when corporations 10 to 20 times the size of MicroStrategy join the fray and start purchasing Bitcoin? Although the tide has not yet shifted for the largest tech companies we have seen growing interest, recently we have seen shareholder proposals at Microsoft and Meta to acquire Bitcoin yet they have failed to pass. 

 

The Broader Trend:

Although MicroStrategy often steals the limelight, the trend of corporate Bitcoin acquisition is already much larger than just MicroStrategy alone. Data shows that more than 60 public and private companies (that have disclosed holdings) currently hold approximately 1.49 million BTC ($US153.7 billion), which accounts for 7.1% of the total Bitcoin supply, (excluding ETFs and wrapped Bitcoin (wBTC)). This indicates that Bitcoin as a treasury reserve is not an isolated strategy but a growing trend among companies. 

 

Factors Driving the Trend:

1. FASB Accounting Changes:
   The Financial Accounting Standards Board (FASB) altered its accounting standards for cryptocurrencies in December 2024. Previously, companies could only report losses on Bitcoin holdings on their balance sheets, which essentially acted as a deterrent as crypto assets could never reflect any growth on the balance sheet. The new standards now allow for gains to be reported, which could significantly accelerate corporate adoption of Bitcoin as it no longer poses a threat to balance sheet health. Think of it this way, if companies were already willing to adopt Bitcoin even though it could only be negative to their balance sheet, the uptake has to be higher considering that positive growth can now be priced on the balance sheet.
2. Regulatory and Political Shifts:
   The landscape has changed with the U.S. political stance towards cryptocurrencies. With Donald Trump’s inauguration and his open embrace of crypto (epitomised by his venture into launching his own TRUMP memecoin), the reputational risk of holding Bitcoin & other crypto assets has notably decreased. This political endorsement, coupled with changes in leadership at regulatory bodies like the SEC and CFTC to pro crypto officials suggests a significantly more crypto-friendly regulatory environment.
3. Potential Executive Actions by Trump:
   In addition last week Bloomberg suggested Trump might potentially sign executive actions that could further catalyze the trend of corporate Bitcoin adoption. 
   • Repeal of SEC’s SAB-121: The SAB-121 act enforces that companies have to record crypto as liabilities on their balance sheets rather than assets when custodying/safeguarding crypto assets for clients. If repealed this could open up the floodgates for banks to possibly start offering crypto brokerage and custody services to customers in a similar fashion that stocks are currently offered through many banks. 
   • Addressing Debanking: By tackling issues where banks remove services from crypto related businesses, this will encourage more companies to engage with Bitcoin without fear of banking repercussions or reputational risks.

 

Why Are Companies Buying Bitcoin

• Hedge Against Inflation/Fiat Exposure: Companies are increasingly viewing Bitcoin as a hedge against inflation, given its capped supply and potential for value preservation in an era where fiat currencies might be devalued by expansive monetary policies. Additionally it sits as a non-sovereign store of wealth that can hedge exposure to fiat currencies. 
• Corporate Strategy and Innovation: Holding Bitcoin can be seen as a strategic move, signaling innovation and alignment with future financial technologies, which could attract a tech-savvy customer base and investors. This will become increasingly relevant as wealth shifts towards younger generations who have a much higher propensity towards crypto and digital assets.

 

The trend of company treasuries purchasing Bitcoin is not just a fleeting phenomenon but a megatrend that could fundamentally alter how companies view their financial reserves. With supportive regulatory shifts, favorable accounting practices, and high-profile endorsements, we are likely on the cusp of a significant transformation. As this trend continues, the implications for the Bitcoin ecosystem are worth keeping a close eye on.

 

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