Bitwise: Corporate Bitcoin buying is an overlooked trend

Author: Matt Hougan, Chief Investment Officer of Bitwise; Translated by: 0xjs@黄金财经

Summary

This isn’t just MicroStrategy; this is a real megatrend that’s powerful enough to drive a big move higher in the Bitcoin market this year.

In this weekly memo, I often try to point out some places where I think the conventional wisdom is wrong. Here’s one:

What MicroStrategy is doing isn’t getting enough attention.

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

That’s true. But most investors I’ve spoken to seem to think that this company is just an outlier, a single entity with a unique founder doing a unique thing.

That view is wrong.

Over the past few months, I’ve been digging into the buying and holding of Bitcoin by companies as a reserve asset, and it turns out that this trend is much bigger than most people realize. In fact, I think it’s a real megatrend.

My prediction: In the next 12-18 months, we will see hundreds of companies using their cash reserves to buy Bitcoin, and their purchases will significantly push up the entire Bitcoin market.

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

Reason One: MicroStrategy’s Influence Is More Than You Think

MicroStrategy is not a particularly large company. It is currently ranked 220th in the world by market capitalization, slightly larger than Chipotle (a restaurant chain) and slightly smaller than Sherwin-Williams (a paint company).

In 2024, MicroStrategy purchased approximately 257,000 Bitcoins. Is that a lot or a little?

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

I’ll say that again: A company the size of Chipotle has bought more than 100% of the new supply of Bitcoin through 2024.

And it’s not stopping there. MicroStrategy recently announced plans to raise more than $42 billion to buy more Bitcoin. At current prices, that’s the equivalent of about 2.6 years of new supply.

So you might as well ask yourself: what would happen if the really big companies started following MicroStrategy’s lead? Meta (which is currently considering a shareholder proposal to add Bitcoin to its balance sheet) is 20 times the size of MicroStrategy.

Reason Two: This Trend Is Expanding Beyond MicroStrategy

MicroStrategy has gotten a lot of media attention, but it’s by no means alone. Today, 70 public companies hold Bitcoin on their balance sheets, as do many private companies (including Bitwise, by the way).

The list of public companies includes well-known cryptocurrency companies such as Coinbase and Marathon Digital, as well as non-crypto companies such as Block, Tesla, Semlar Scientific and Mercado Libre. Excluding MicroStrategy, these companies hold a total of 141,302 Bitcoins.

Private companies are not required to disclose how much Bitcoin they hold, but those that do voluntarily (such as SpaceX, Block.one, etc.) hold at least another 368,043 Bitcoins, according to BitcoinTreasuries.com.

This is significant. It means that even today, MicroStrategy's Bitcoin holdings account for less than 50% of the corporate Bitcoin market. I expect it will eventually be a small share.

Reason Three: The Number of Companies Buying Bitcoin Will Explode

I am writing this memo today because I believe the number of companies holding Bitcoin on their balance sheets will explode.

Why? Until early 2025, there are two factors that prevent companies from joining this trend.

The first is reputational risk. In 2024, the CEO of a large public company faces huge obstacles when it comes to holding Bitcoin as a reserve asset. The company faces risks such as negative media coverage, shareholder lawsuits, regulatory attention, and a board of directors that firmly disagrees. The same constraints that have prevented institutional investors from allocating Bitcoin for years are also weighing on the company.

But in the past few months, the reputational risk has been greatly reduced. After the election, Washington has become receptive to cryptocurrencies at the highest levels, and holding Bitcoin has become more common and more popular. This alone could double the number of companies buying Bitcoin.

But there is a more important factor at work.

Starting in December 2024, the Financial Accounting Standards Board (FASB, which regulates the way public companies report their financials) implemented a new rule called ASU 2023-08, which changes the accounting treatment of Bitcoin in Generally Accepted Accounting Principles (GAAP) reports.

Until the beginning of 2025, Bitcoin is considered an "intangible asset" under GAAP and is subject to "impairment testing." This means that companies that buy Bitcoin are required to record its value on their books when they buy it, and write it down if the price drops. But if the price goes up, companies are not allowed to write it up.

I know it sounds crazy, but it’s true. However, under ASU 2023-08, things have changed. Now, if the price of Bitcoin goes up, companies can mark it to market and record a profit.

If 70 companies were willing to put Bitcoin on their balance sheets when the value of Bitcoin could only go down from an accounting perspective, imagine how many companies would be willing to do so now? 200? 500? 1,000?

Conclusion: Why Companies Are Buying Bitcoin

The reason many people are skeptical of this trend is that they struggle with the question of why companies are buying Bitcoin.

We all know why MicroStrategy is doing this—it’s the company’s main mission. But why would a thriving medical device company like Semlar Scientific get in on the action?

I’ve asked myself this question many times over the past few months. Then one day it hit me: Businesses are buying Bitcoin for the exact same reasons that individual investors are.

Some are greedy, hoping that adding Bitcoin to their balance sheets will boost their stock prices. Others are concerned about a depreciating dollar and want to protect their cash from long-term erosion. Still others want to signal that they are part of the Bitcoin camp, hoping to attract customers. Some may just be following a hunch.

The reasons vary, but at the end of the day, they don’t matter. As an investor, you don’t have to know why every business is buying Bitcoin, just like you don’t have to know why every institution, financial advisor, and retail investor is buying Bitcoin. You just have to look at the data and ask yourself two questions: Where is all this corporate demand going? And what does it mean for the market?