19 companies with a combined market capitalization of $1 trillion have more than $6.5 billion in Bitcoin
A new analysis conducted by Nickel Digital Asset Management (Nickel), a specialized investment manager in Europe focused on the digital asset market, shows that 19 listed companies with a market capitalization of more than $1 trillion invested about $6.5 billion in Bitcoin.
Corporations Enter the Crypto Space
While seven companies bought Bitcoin in 2020, eight new entrants, including Tesla, purchased BTC in just the first four months of 2021. Although Tesla later suspended the use of Bitcoins as a means of payment for Tesla cars, they remained the holder of the cryptocurrency.
In these distributions, there is a noticeable bias in relation to the United States and Canada. Of the 19 listed companies, 13 are the US and Canadian companies, three are European, one is Turkish, one is from Hong Kong and one is Australian.
Nickel’s analysis shows that another 17 listed companies have bought Bitcoin without disclosing the full composition of their portfolio at this stage.
Further analysis conducted by Nickel reveals that a staggering $43.2 billion worth of Bitcoin is held through various closed bitcoin trusts and exchange-traded products. These investment funds hold these distributions on behalf of their clients, including a number of retail investors, asset managers, and (increasingly) institutional asset allocators.
The geography of these funds shows the same strong bias towards North America, with US and Canadian funds accounting for the overwhelming 65% of all the above assets.
A survey conducted earlier this year involving institutional investors and asset managers across Europe, who jointly manage more than $110 billion in assets, found that over the next two years, 81% expect an increase in the number of corporations using Bitcoin for their treasury reserves. Of these, about 29% expect a sharp increase in this trend.
Thus, the latest results fit well into the overall trend of increasing allocations to digital assets.
Anatoly Krachilov, co-founder and CEO of Nickel Digital, comments: “Recently, an increasing number of corporations have made significant multi-billion dollar contributions to Bitcoin as part of their treasury reserve strategies. This, combined with the confirmed inclusion of crypto assets in portfolio formation by leading global asset managers such as Paul Tudor Jones, Bill Miller, Raffer, and Guggenheim Partners, is a very important endorsement of Bitcoin’s new functionality for hedging against inflation”.
Institutionals are forced to seek salvation in Bitcoin
The Covid-19 crisis and the expansionary monetary policy pursued by central banks in response to the crisis have dramatically changed the outlook for paper currencies, raising the risk of its depreciation. This, combined with the Fed’s increasingly inflationary guidance, and the ever-increasing pile of negative-yielding $18 trillion in global bonds, has prompted many corporations to consider placing in alternative assets.
“Bitcoin is a unique non-discretionary asset, whose monetary policy is hard-coded at the core protocol level, and no one has the ability to inflate or change the number of units in circulation. It offers the essential attributes of an immutable and verifiable offering with a transparent and predictable release schedule. In addition, it is designed with important deflationary characteristics, due to which its supply predictably decreases by 50% every four years, as a result of a process known as halving. This makes it an attractive anti-inflationary asset for both many corporations and asset managers”.
The crypto asset space remains volatile as it goes through the early stages of the adoption stages. However, increased allocations by large institutional and corporate players are expected to reduce this volatility over time, thanks to the longer-term and more sustainable type of capital brought in by these investors, as well as a much larger pool of liquidity, in the size of the crypto ecosystem.