At the time of writing this article, around 3.6% of Bitcoin (BTC) is locked up in long-term holdings by institutional investors. According to the data, 13 entities have amassed close to 600,000 BTC — about 2.85% of all Bitcoins and worth approximately $6.9 billion.
The list includes MicroStrategy at the top, with close to 38,250 BTC (about $450 million). The second on the list is Galaxy Digital Holdings with 16,651 BTC (about $198 million). The third, with 4,709 BTC, is the payment company Square Inc., founded by Twitter’s CEO Jack Dorsey. Separately, some companies help their clients invest in BTC. One such company is Grayscale Investments through its GBTC trust, which holds around 450,000 BTC.
With that stated, the amount of Bitcoin that publicly traded companies hold as a reserve is a tiny fraction of the corporate treasuries around the world. Indeed, the actual amount of cash held in reserves is in the trillions of U.S. dollars. But consider this: Nine companies in the S&P 500 are sitting on close to $600 billion in cash and short-term investments, and if just 5% (or $30 billion) of that amount is converted into Bitcoin, the price could easily increase fivefold.
Of course, there is the question of where to place Bitcoin in company investment portfolios. The most likely category is “alternative investment.” The need to strike a balance between traditional and alternative investments might reduce the appetite the market might have for the cryptocurrency.
Nevertheless, the potential demand is still huge. As mentioned in a recent report by Fidelity, the alternative investment market grew to $13.4 trillion by the end of 2018, and very little of it was in Bitcoin. It might take converting as little as 5% of that to see the Bitcoin price moon.
Some investment firms have chosen to create entirely separate holding companies for Bitcoin and other crypto assets. For example, Stone Ridge launched New York Digital Investment Group, which today has over $1 billion worth of crypto.
What drives this movement?
To understand this phenomenon better, I recently had an enlightening chat with Michael Saylor, the founder of MicroStrategy. In particular, I found his pick of 100 years as the base on which to measure the success or failure of a reserve asset very interesting.
Of course, most companies are founded with the expectation that they are going to be around for quite some time — centuries, preferably. Even for individuals, it still makes sense to look at how investments might change over a hundred years, as a person might amass wealth intended for heirs or even causes that are close to the heart, such as climate change. As Michael Saylor said:
“An excellent way to evaluate any investment is to take $100 million and move it forward a hundred years and ask the question what happens. If I had $100 million worth of currency in any of the largest cities of the world in the year 1900, and I went forward for 100 years, and I put the money into the best bank…
Read more:Bitcoin is the best treasury reserve asset humanity’s ever had
