Bitcoin: From Retail Investment to Recognized Store of Value for Corporations and Governments Alike

The world's largest cryptocurrency, Bitcoin, has come a long way over the past decade and a half. From initially being a retail investment aimed at wealth accumulation

Bitcoin, the world's largest cryptocurrency, has come a long way over the past decade and a half. Initially viewed as a retail investment for accumulating wealth, Bitcoin has now evolved into a recognized store of value for both corporations and governments.

Several factors have contributed to Bitcoin's ascent as a major safe haven alongside gold and silver worldwide, including geopolitical tensions, macroeconomic uncertainty, and BTC's outperformance compared to major traditional asset classes.

The value of BTC has risen over 113% in the past year, and it currently trades around $64,000, representing an increase of 94,258% in the last 11 years. This year, Bitcoin had a big moment as the US SEC approved the first-ever Spot Bitcoin ETF, legitimizing the crypto asset and making it easy for organizations to invest in it.

Statistically speaking, Spot Bitcoin ETFs recorded a whopping $27 billion in inflows in Q1 of 2024, which slowed down in Q2 to just $6 billion. The positive flow trend may yet again take off, with July already capturing more than $2 billion in inflows so far. These ETFs are supported by some of the most reputable institutions in TradFi, such as Fidelity and BlackRock, with the latter's CEO Larry Fink recently calling it “digital gold.”

With the ETF removing the critical regulatory compliance barrier to Bitcoin entry, more corporations have been turning to the crypto asset as a means to diversify and preserve wealth. This shows the changing times and the growing trust and confidence in Bitcoin.

While the crypto asset is still in its infancy compared to other asset classes, Bitcoin has stood the test of time and emerged victorious. Despite volatile market cycles, political pressure, and black swan events, Bitcoin has shown resilience and an increase in its adoption. As a result, even those who were once skeptical of Bitcoin are now publicly endorsing it as a treasury reserve asset.

As we highlighted yesterday, there's now a growing acceptance of Bitcoin in the TradFi space, with some corporations using BTC to safeguard their cash reserves amidst ongoing inflation, rising government debt levels, and declining trust in fiat currencies.

This makes sense given Bitcoin's scarcity, as there would only ever be 21 million BTC, and 90% of it is already mined. Unlike fiat currencies, which lose their purchasing power over time, Bitcoin's capped supply is deflationary. Instead of experiencing an erosion of value over time, BTC has been rising to new ATHs.

Bitcoin's Growing Usage as a Treasury Reserve Asset

The trend of using Bitcoin as a reserve asset first started in 2020 when MicroStrategy added Bitcoin to its balance sheet. Today, it is holding 226,331 BTC, worth $14.48bln on a cost basis of $8.33bln. MicroStrategy now holds just over 1% of BTC's maximum supply.

MicroStrategy CEO Michael Saylor believes the US dollar, which has been devaluing since the Federal Reserve took over in 1913, will not retain its global reserve status.

“There's a macroeconomic wind blowing — big — it's going to impact $400 trillion of capital. That capital is sitting in fiat instruments that are being debased. That capital is going to want to convert into strong money,” which, according to Saylor, is Bitcoin.

After MicroStrategy, Tesla, Square, and Stone Ridge, among others, also added Bitcoin to their treasury strategies. Recently, publicly traded health tech company Semler Scientific also adopted Bitcoin as its primary treasury reserve asset and purchased 581 BTC, with Chairman Eric Semler calling it:

“A reliable store of value and a compelling investment.”

US-based meat and seafood company Beck & Bulow announced converting 20% of its assets to BTC. It will accept further Bitcoin payments and incorporate it into their employee 401k program. Publicly traded payment business Mogo meanwhile has authorized an initial investment of up to $5 million in Bitcoin.

Japanese hotel service company Metaplanet also purchased JPY 1 billion ($7.2 million) worth of Bitcoin in “a direct response to sustained economic pressures in Japan, notably high government debt levels, prolonged periods of negative real interest rates, and the consequently weak yen.”

As of March 31st, the US companies held $187 bln in cash on hand. The estimated total amount of crypto held by private and public companies globally is currently around 816,163 BTC, accounting for about 4% of Bitcoin's total supply.

While a slow number, there's a slow but steady increase in Bitcoin being incorporated into treasury reserves, which isn't limited to just companies. Even governments are now showing an inclination, including the US. According to Alex Thorn of Galaxy Digital, “Simple game theory dictates that adoption by one nation

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