The trend of large companies and organizations buying and holding bitcoin is a significant development in the mainstream adoption of the cryptocurrency. The growing recognition of cryptocurrencies as a legitimate asset class, combined with the potential for long-term growth and the potential to hedge against inflation, has made them increasingly appealing to large companies and organizations. As the trend continues, it is likely that we will see even more companies and organizations embrace the digital asset in the years to come.
The Buying Has Started
The large companies and organizations buying and holding bitcoin have been making headlines in recent years. The trend started with Microstrategy and of coarse then Tesla’s announcement in February 2021 that it had invested $1.5 billion in the cryptocurrency, along with Square, and a growing number of firms that have since embraced the digital asset.
Many of these companies have seen bitcoin as a hedge against inflation, as central banks around the world continue to print money to support their economies during the pandemic. In addition, the increased demand for cryptocurrencies and the increasing recognition of their potential as an asset class have also made them more appealing to large companies and organizations.
Tesla’s investment in bitcoin was a turning point in the mainstream adoption of the cryptocurrency. The company’s CEO, Elon Musk, has been a vocal advocate of the digital asset, regularly tweeting about it and even causing significant price swings with his tweets. Tesla’s move into bitcoin was seen as a significant endorsement of the cryptocurrency, and it sparked a wave of interest from other companies and organizations.
Microstrategy, a business intelligence company, was one of the first large companies to follow in Tesla’s footsteps, investing $425 million in bitcoin in August 2020. The company has since increased its bitcoin holdings to over $4 billion and has become a strong advocate for the cryptocurrency, promoting it as a hedge against inflation and a viable alternative to traditional store of value assets like gold.
Square, a mobile payment company founded by Jack Dorsey, followed suit, investing $50 million in bitcoin in October 2020. The company’s investment accounted for roughly 1% of its total assets at the time and was part of its larger strategy to diversify its portfolio and embrace digital assets.
The trend of companies investing in bitcoin has since continued, with a growing number of firms, including Meitu, Stone Ridge, and Ruffer Investment, embracing the digital asset. In January 2021, Meitu, a Chinese tech company, announced that it had invested $40 million in bitcoin, while Stone Ridge, a New York-based asset manager, revealed that it had allocated 10% of its assets to the cryptocurrency. Ruffer Investment, a UK-based investment firm, announced in December 2020 that it had invested 2.5% of its total assets in bitcoin as a hedge against inflation.
The trend of companies buying and holding bitcoin has also been reflected in the institutional investment community. Institutions such as Fidelity Investments, JPMorgan Chase, and Goldman Sachs have been exploring ways to provide access to cryptocurrencies to their clients, recognizing the growing demand for digital assets and the potential for long-term growth.
Fidelity Investments, one of the largest asset managers in the world, launched its cryptocurrency trading and custody service in August 2019, allowing its institutional clients to trade and store digital assets. The company has since been a strong advocate for cryptocurrencies and has been working to educate its clients about the potential benefits and risks of investing in digital assets.
JPMorgan Chase, one of the largest banks in the world, has also been exploring the potential of cryptocurrencies, recently launching its own cryptocurrency, JPMorgan Coin, for use in settling payment transactions. The bank has been vocal about its support for the technology behind cryptocurrencies and its potential to revolutionize the financial industry.
Goldman Sachs, another large investment bank, has been exploring the potential of cryptocurrencies, recently announcing its plans to launch a cryptocurrency trading desk. The bank has been looking into ways to provide its clients with exposure to digital assets, recognizing the growing demand for cryptocurrencies and the potential for long-term growth.
In addition to the large companies and organizations buying and holding bitcoin, there have been a growing number of funds and ETFs that have been created to provide exposure to the cryptocurrency. The Grayscale Bitcoin Trust, for example, is one of the largest and most popular investment vehicles for those looking to invest in bitcoin. The trust allows investors to gain exposure to the cryptocurrency without having to directly purchase and store it.
Similarly, exchange-traded funds (ETFs) have been gaining popularity as a way for investors to gain exposure to cryptocurrencies without having to directly purchase and store them. In the US, the SEC has yet to approve a bitcoin ETF, but regulators in Canada have approved several such funds, and there have been several applications filed in the US as well.
While the trend of large companies and organizations buying and holding bitcoin has been gaining momentum, there are still those who are skeptical of the cryptocurrency. Some argue that its volatility makes it an unreliable store of value, while others are concerned about its association with criminal activity and the potential for it to be used for illegal purposes.
Despite these concerns, the trend of companies buying and holding bitcoin shows no signs of slowing down. The growing recognition of cryptocurrencies as a legitimate asset class, combined with the potential for long-term growth and the potential to hedge against inflation, has made them increasingly appealing to large companies and organizations.