Bitcoin, with a $1.3 trillion market cap and hundreds of millions of users, is still often viewed as a criminal tool, a casino, or a get-rich scheme that has no future in global finance. Despite a shaky beginning and widespread suspicion, over the past 15 years, Bitcoin has proved to be durable and has been fully embraced by large financial institutions, hedge funds and even nation states, who see the cryptocurrency as a hard asset to be held in store. Larry Fink, chief executive of BlackRock, has gone from being a skeptic to proclaiming that ‘we believe bitcoin is a speculative asset and a store of value like gold’ and ‘I believe it has a future as an asset class’, while the world’s biggest asset manager launched its Bitcoin ETF in January 2024, which in a matter of months grew to $23 billion, a sign of burgeoning institutional interest and an indication that Bitcoin is capable of providing stability in the event of extensive economic disruption.
The corporate embrace of Bitcoin by companies such as MicroStrategy (link to Wikipedia article) demonstrates that we can expect to see more digital asset integration into our existing conventional finance buildings. MicroStrategy has leveraged its large Bitcoin purchases as a core component of their treasury strategy. By using the strategy of buying Bitcoin through low-interest convertible debt, MicroStrategy illustrates a financial strategy that exploits global liquidity conditions, as well as Bitcoin’s unique supply-side hardness, in a new asset class. This represents a modern version of the 60/40 investment portfolio, but illustrates problems in modern finance like record-low bond yields and highly concentrated gains in the stock market.
In the future, corporate enthusiasm for Bitcoin, illustrated by MicroStrategy’s pioneering financial moves, could mark the beginning of a new way for companies to manage their treasury operations in an increasingly unstable economic environment as the market capitalisation of Bitcoin accelerates past November. Bitcoin could become a much bigger player in global finance. It has the potential to reach or surpass the market capitalisation of gold, and evolve from a shady digital currency to a major financial asset. Bitcoin could become a major tool in future corporate finance strategies and, consequently, in remaking economies worldwide.
Source: Forbes
