Bitcoin Exhibits Significant Appeal in Diversified Asset Allocation, Enhanced Fund Management Efficiency, and Increased Corporate Value
This article is sourced from an article by Tiger Research Reports, reprinted by Foresight News.
(Background Summary: Bitcoin fluctuates around $95,000; Standard Chartered predicts it could rise to $120,000 in Q2, while Bernstein forecasts institutional demand could push BTC up to $200,000 by year-end.)
(Background Supplement: Major news! Arizona has passed a Bitcoin reserve bill allowing up to 10% of public funds to be invested in BTC, pending the governor’s signature.)
Key Points Summary
- The trend of corporate investment in Bitcoin is expanding: Following the U.S. Securities and Exchange Commission (SEC) approving Bitcoin spot ETFs, corporate investment strategies are gradually heating up. This trend is not limited to Western markets but is extending to Asia.
- Reasons why corporations choose Bitcoin: Bitcoin exhibits great appeal in diversified asset allocation, enhancing fund management efficiency, and increasing corporate value.
- Participation and development prospects in the Asian market: Investment by Asian companies in Bitcoin is still in its infancy, but successful cases like Metaplanet indicate significant market expansion potential. However, regulatory uncertainties and a lack of institutional support remain major obstacles.
Introduction
This year, the U.S. Securities and Exchange Commission (SEC) approved Bitcoin spot ETFs, marking a milestone event in the institutionalization of crypto assets. Subsequently, an increasing number of companies have begun to incorporate Bitcoin into their investment strategies. For example, MicroStrategy has identified Bitcoin as one of its key financial assets. This trend is rapidly expanding from Western markets to Asian markets, gradually becoming a global phenomenon. This article will analyze the main strategies driving corporate adoption of Bitcoin and the influencing factors behind it.
The Surge in Corporate Investment in Bitcoin
As the value of Bitcoin becomes increasingly recognized, its appeal continues to grow. At the national level, some governments have begun discussions on investing in Bitcoin. For instance, El Salvador has taken proactive steps to continuously purchase Bitcoin. In the U.S., discussions regarding President Trump’s plan to reserve Bitcoin have become a focal point. Additionally, Poland and Suriname are exploring the possibility of treating Bitcoin as a strategic asset.
However, apart from El Salvador, most countries’ investments in Bitcoin remain at the policy discussion or election promise stage, and practical implementation is still some time away. Currently, the U.S. has not directly invested in Bitcoin but holds some Bitcoin to recover criminal proceeds. Furthermore, due to the significant price volatility of Bitcoin, many central banks still prefer to choose gold as a more stable reserve asset.
While government actions regarding Bitcoin progress slowly and are limited, corporate participation is accelerating. Companies such as MicroStrategy, Semler Scientific, and Tesla have made bold investments in the Bitcoin space. This sharply contrasts with the cautious attitudes adopted by most governments.
Three Major Reasons Corporations Are Focusing on Bitcoin
Investing in Bitcoin is no longer just a trend; it is gradually becoming a core financial strategy for corporations. Bitcoin attracts companies due to its unique characteristics, with its value primarily reflected in the following three aspects:
Realizing Asset Diversification
Traditionally, corporate financial assets are usually allocated around stable options such as cash and government bonds. While these assets ensure liquidity and help mitigate risks, their returns are relatively low, often struggling to outpace inflation, which may lead to a shrinkage in actual asset value.
As an emerging alternative asset, Bitcoin can effectively address these shortcomings. It not only possesses high return potential but also diversifies investment risks, providing companies with a new asset allocation choice. Over the past five years, Bitcoin has significantly outperformed traditional assets such as the S&P 500, gold, and bonds, even surpassing high-risk, high-return junk bonds. This indicates that Bitcoin is not merely an alternative option but also a vital tool in corporate financial strategy.
Enhancing Asset Management Efficiency
Another significant reason Bitcoin attracts companies is its efficient asset management characteristics. Bitcoin supports 24/7 trading, providing companies with great flexibility to adjust asset allocations at any time. Additionally, compared to traditional financial institutions, the process of liquidating Bitcoin is more convenient, without being restricted by bank operating hours or cumbersome procedures.
Although companies still worry that liquidating Bitcoin may impact prices, this issue is gradually alleviating with the increasing market depth. According to data from Kaiko, Bitcoin’s “2% market depth” (the total amount of buy and sell orders within a 2% range of the current market price) has steadily grown over the past year, with an average daily market depth reaching approximately $4 million. This indicates that the liquidity and stability of the Bitcoin market are continuously improving, creating a more favorable environment for companies to use Bitcoin.
Increasing Corporate Value
Holding Bitcoin is not only a financial choice; it can also significantly enhance corporate value and stock prices. For example, after announcing their Bitcoin acquisitions, both MicroStrategy and Metaplanet saw substantial increases in their stock prices. This strategy serves not only as an effective marketing tool in the digital asset industry but also provides corporations with a path to seize growth opportunities in this sector.
Increasing Bitcoin Investment by Asian Companies
Although Asian companies are still in the early stages of Bitcoin investment, they are gradually increasing their holdings. For instance, Meitu from China, Metaplanet from Japan, and Brooker Group from Thailand have regarded Bitcoin as a strategic financial asset. Nexon has also made large-scale Bitcoin purchases. Notably, Metaplanet has been particularly active, acquiring 1,142 Bitcoins in the past six months.
However, the current participation of Asian companies in the Bitcoin market remains relatively low. Statistics indicate that the total amount of Bitcoin held by Asian companies accounts for less than 1% of the global total, primarily due to regulatory restrictions in many countries. For example, in South Korea, companies are unable to open accounts on cryptocurrency exchanges and face numerous obstacles to investing in overseas Bitcoin ETFs or launching funds related to cryptocurrency trading. As a result, these companies can hardly invest in Bitcoin through formal channels.
Despite the many challenges posed by the regulatory environment, the participation potential of Asian companies in the Bitcoin market remains promising. Some companies are circumventing regulatory restrictions by establishing overseas subsidiaries for investment. Meanwhile, countries like Japan have made some progress in relaxing relevant policies. Leading investment cases like Metaplanet are attracting more market attention. These positive changes may pave the way for broader participation of Asian companies in the Bitcoin market in the future.
Conclusion
Bitcoin investment is gradually becoming a popular financial strategy adopted by companies. However, its price volatility remains a significant challenge for enterprises, especially under the influence of external factors such as international politics. The market crash in 2022 clearly exposed the potential risks associated with companies holding Bitcoin. Therefore, companies should exercise caution when investing in Bitcoin and reasonably pair it with safer assets to mitigate overall risks.
Moreover, for Bitcoin to further develop within corporate investment portfolios, a clear institutional framework needs to be established. Currently, there is a lack of clear guidance regarding the holding and accounting of crypto assets, leading to confusion among companies during practical operations. Once these uncertainties are resolved, Bitcoin could play a more significant role in corporate asset diversification.
