Bitwise Chief Investment Officer: Hundreds of companies will buy Bitcoin in the next year and a half #CriptoNews

Author: Matt Hougan, Chief Investment Officer of Bitwise

Translator: Luffy, Foresight News

In this week’s memo, one thing I want to emphasize is where I believe conventional wisdom is mistaken, one of which is:

MicroStrategy’s purchase of Bitcoin has not received enough attention.

I know what you’re thinking: “Not enough attention? This company and its founder Michael Saylor are media regulars.”

That’s true. But most investors I’ve spoken with seem to view this company as an outlier, a unique entity with a unique founder doing unique things.

This is wrong.

Over the past few months, I’ve delved into the phenomenon of companies purchasing and holding Bitcoin as a reserve asset, and my conclusion is that this trend is much broader than most people realize. In fact, I believe it is a genuine megatrend.

My prediction is that in the next 12 to 18 months, hundreds of companies will begin purchasing Bitcoin, and their buying activity will significantly boost the entire Bitcoin market.

Here are three reasons why this trend is more important than most people imagine.

Reason 1: The Influence of MicroStrategy is Beyond Imagination

MicroStrategy is not a particularly large company. By market capitalization, it currently ranks 220th globally, slightly larger than the Mexican fast-food company Chipotle and slightly smaller than the paint company Sherwin-Williams.

Last year, MicroStrategy purchased about 257,000 Bitcoins. Is that a lot? Or a little?

To put this number into perspective, it is more than all the Bitcoins mined in 2024 (218,829 Bitcoins).

Let me say that again: a company comparable in size to Chipotle purchased more Bitcoins in 2024 than the new supply of Bitcoin that year.

And it hasn’t stopped. MicroStrategy recently announced plans to raise over $4.2 billion to acquire more Bitcoin. At current prices, this is roughly equivalent to 2.6 years of new supply.

So ask yourself: what would happen if truly large companies began to follow MicroStrategy’s lead? The metaverse platform company Meta, which is currently considering shareholder proposals to include Bitcoin on its balance sheet, is 20 times the size of MicroStrategy.

Reason 2: This Trend Has Long Exceeded MicroStrategy’s Scope

MicroStrategy is in the spotlight, but it is by no means an outlier. Today, there are 70 publicly traded companies holding Bitcoin on their balance sheets, and many private companies are doing the same (by the way, including Bitwise).

The list of public companies includes well-known cryptocurrency firms like Coinbase and Marathon Digital, as well as non-crypto companies like Block, Tesla, Semlar Scientific, and Mercado Libre. These companies (excluding MicroStrategy) collectively hold 141,302 Bitcoins.

Private companies are not required to report their Bitcoin holdings, but according to BitcoinTreasuries.com, voluntarily disclosed companies (such as SpaceX, Block.one, etc.) hold at least 368,043 Bitcoins.

This means that even today, MicroStrategy’s share of corporate Bitcoin holdings is less than 50%. I expect its share will ultimately be even smaller.

Reason 3: The Number of Companies Purchasing Bitcoin is About to Surge

The reason I’m writing this memo today is that I believe the number of companies holding Bitcoin on their balance sheets is about to surge.

Why? Until the beginning of this year, two factors had hindered companies from joining this trend.

The first factor is reputational risk. Last year, a CEO of a large public company faced significant obstacles when considering Bitcoin as a reserve asset. The company faced negative media coverage, shareholder lawsuits, regulatory scrutiny, and many other risks, and the board was simply not on board. The same constraints that have hindered institutional investors from allocating Bitcoin have also troubled companies.

But in the past few months, reputational risk has significantly decreased. After the elections, as Washington’s top officials began to embrace cryptocurrencies, holding Bitcoin has become more commonplace and accepted. This alone should double the number of companies purchasing Bitcoin.

But there is a second, and even larger, factor at play.

Since December of last year, the Financial Accounting Standards Board (FASB), which oversees the financial reporting of public companies, implemented a new regulation called ASU 2023-08, which changed the accounting treatment of Bitcoin under Generally Accepted Accounting Principles (GAAP).

Before the beginning of this year, under GAAP, Bitcoin was considered an “intangible asset” that required “impairment testing.” This meant that companies purchasing Bitcoin had to record its value on their books at the purchase price, and if the price fell, they had to write down its value. However, if the price rose, they were not allowed to adjust the value upward.

I know this sounds crazy, but it’s true. However, under ASU 2023-08, the situation has changed. Now, if the price of Bitcoin rises, companies can mark it to market and record profits.

If 70 companies were willing to include Bitcoin on their balance sheets when its value could only decline from an accounting perspective, imagine how many companies would be willing to do so now. 200? 500? Or 1,000?

Conclusion: Reasons for Companies to Purchase Bitcoin

Many people are skeptical of this trend because they are puzzled about why companies are purchasing Bitcoin.

We all know why MicroStrategy is doing it: it’s the company’s primary mission. But why would a thriving medical device company like Semlar Scientific want to get involved?

Over the past few months, I’ve asked myself this question multiple times. But one day, it suddenly clicked: the reasons companies purchase Bitcoin are the same as those of individual investors.

Some companies are greedy and hope that including Bitcoin on their balance sheets will boost their stock prices. Some companies are worried about the devaluation of the dollar and want to protect their cash from long-term losses. Others want to signal that they are part of the Bitcoin camp to attract customers. Some companies may just be acting on intuition.

There are many reasons, but that doesn’t matter. As an investor, you don’t need to understand why every institution, financial advisor, and retail investor is buying Bitcoin; you only need to look at the numbers and ask yourself two questions: where do these demands from companies seem to be headed? What does this mean for the market?