Bitwise chief investment officer Matthew Hougan believes that companies adding Bitcoin (BTC) to their balance sheets are no longer an anomaly but a burgeoning megatrend that could transform the crypto market this year.
The aforementioned is a Latest Memo Hougan pointed out to clients that MicroStrategy is making headlines for its aggressive BTC strategy. It has purchased approximately 257,000 BTC – more than the total amount of Bitcoins mined in 2017. The company plans to raise $42 billion for further purchases.
Hougan stated that the trend is far more than MicroStrategy. Bitcoin is now held by 70 public companies including Tesla, Block, Mercado Libre and other household names.
The combined holdings of these companies total 141 302 BTC, while firms like SpaceX, Block.one, and Block.one, which are private, have revealed at least 368 BTC.
Changes in the regulatory framework
Hougan believes that the Financial Accounting Standards Board (FASB’s) ASU 2023-8 is a game changer. This rule allows publicly traded companies to mark Bitcoin holdings to market value, enabling them to record profits when Bitcoin’s price rises.
Bitcoins were previously treated as currency. “intangible asset,”Forces companies to lower the value of their products if prices fall, but does not allow them to realize gains if they increase.
Hougan says that as reputational risk declines and accounting becomes more favorable, the number of businesses buying Bitcoin will explode. Hougan estimates that in 12-18 months, the 70 companies currently buying Bitcoin could increase to thousands.
Hougan says that individuals and companies both buy Bitcoin. Many see Bitcoin as a hedge to protect against the depreciation of the US dollar, some as an asset that can boost stock prices and still others as something to signal innovation and attract talent and customers.
Although motivations differ, Mr. Ayers believes that the surge in corporate demand could drive Bitcoin’s price significantly higher. This is especially true as large players such as Meta and other companies consider entering the market.
Hougan ends the document with a statement that says retail investors do not need to know why each company buys Bitcoin. They should instead ask where the demand for Bitcoin is headed and what this means for market.
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