Growing numbers of listed companies invest in Bitcoin

By Gaia Lamperti

New analysis from London-based Nickel Digital Asset Management reveals that 20 listed companies with a market cap of over $1.0 trillion have around $9.6 billion invested in Bitcoin. They originally spent $5.9 billion to invest in the cryptocurrency.

Nickel used data from Bitcoin Treasuries earlier this month and found out that North American corporations dominate the listed company investment in Bitcoin with US and Canadian companies accounting for 13 of the 20. The list also has corporates based in the UK, Germany, Turkey, Liechtenstein, Hong Kong, Norway, and Australia.

“We are evidencing an increasing number of corporates allocating to Bitcoin as part of their treasury reserves. This is an important validation of this asset as a long-term hedge against currency debasement, as well as a source of uncorrelated returns,” commented Anatoly Crachilov, CEO and Founding Partner of Nickel Digital. “The analysis of digital assets performance versus traditional asset classes shows sizable outperformance by digital assets over the medium to long term. This helps explain the increasing interest in digital assets by corporations and institutional investors as part of their wider asset allocation.”

Further analysis by Nickel reveals a staggering $60 billion worth of Bitcoin is held through various Bitcoin closed-ended trusts and exchange-traded products. These investment funds hold these allocations on behalf of their clients, including a range of retail investors, asset managers, and – increasingly – institutional asset allocators.

The geography of these funds exhibits a similar strong North American bias, with US and Canadian funds accounting for an overwhelming 75% of the above holdings.

“The crypto assets space remains volatile as it moves through the early stage of the adoption curve,” Crachilov added. “However, increasing allocations by large-scale institutional and corporate players are expected to lead to a reduction in volatility over time, thanks to a longer-term, stickier type of capital brought by those investors, as well as a much larger liquidity pool of crypto ecosystem.”

Nickel research from earlier this year with institutional investors and wealth managers across Europe who collectively manage over $110 billion in assets, revealed that over the next two years 81% expect to see an increase in corporations using Bitcoin for their treasury reserves. Of these, some 29% expect to see dramatic growth in this trend.

For long, the idea that publicly traded corporations might buy Bitcoin for their reserves was considered risky and thoughtless. The top cryptocurrency was considered too volatile, too fringe to be seriously embraced by established businesses.

But, fueled by the economic effects of the Covid-19 pandemic and by the mainstreamisation of the coin, over the past year that taboo has been well and truly broken, with a number of major institutional investors buying up Bitcoin, with the likes of software company MicroStrategy, payments processor Square and EV manufacturer Tesla.

Investors who might not want to bid on Bitcoin themselves but do recognise the currency’s potential, investing in shares of public companies that hold Bitcoin can be a way of gaining exposure to the asset without the hassle of arranging self-custody.