Bitwise Chief Investment Officer Matthew Hougan believes that companies adding Bitcoin (BTC) to their balance sheets are no longer an anomaly, but a burgeoning megatrend that could transform the crypto market this year.
In one recent note For clients, Hougan highlighted that MicroStrategy is making headlines with its aggressive BTC accumulation strategy. The company has acquired approximately 257,000 BTC, more than all the Bitcoin mined last year, and plans to raise another $42 billion to continue its purchases.
Hougan noted that the trend goes well beyond MicroStrategy. As of January 14, 70 listed companies, including household names such as Tesla, Block and Mercado Libre, have Bitcoin on their balance sheets.
These companies collectively own 141,302 BTC, while private companies such as SpaceX and Block.one have disclosed holdings of at least 368 BTC.
Regulatory changes
According to Hougan, the breakthrough is the introduction of ASU 2023-08 by the Financial Accounting Standards Board (FASB). This rule allows publicly traded companies to mark Bitcoin holdings at market value, allowing them to book profits when the price of Bitcoin rises.
Previously, Bitcoin was treated as an ‘intangible asset’, forcing companies to write down its value when the price fell, but unable to book profits when it rose.
As reputational risks diminish and the accounting landscape becomes more favorable, Hougan predicts an explosion in the number of companies buying Bitcoin. He estimates that the current number of 70 could grow to hundreds, even thousands, in the next 12 to 18 months.
Moreover, Hougan states that companies buy Bitcoin for the same reasons as individuals. Some see it as a hedge against the dollar’s depreciation, others as a speculative tool to boost stock prices, and still others as a signal of innovation to attract customers and talent.
While motivations vary, he believes the influx of corporate demand has the potential to drive Bitcoin prices significantly higher, especially as major players like Meta and others consider entry.
Hougan concludes the paper by saying that retail investors don’t need to understand why every company buys Bitcoin. Instead, they should ask themselves where this demand is going and what it means for the market.
