Six months after the third Bitcoin halving, we have seen signs that the price of the crypto starts to increase significantly. Most Bitcoin holders expect the price of Bitcoin to rise 10 times. For most of us, this simply means a huge return on investment. But for listed firms that use Bitcoin as a reserve asset, they have more to do.
According to data from Bitocin Treasuries, 15 listed firms have chosen to use Bitcoin as a reserve asset. When you look closely at these firms, you will find that they can be divided into two categories:
The first one is firms whose main purpose is to hold Bitcoin through mining, digital asset holding or blockchain technology activities, the second type is that firms purchase Bitcoin as their reserve assets via part of funds in addition to their main business activities.
As far as I know, only two firms currently belong to the second category: MicroStrategy and Square. They have both started buying Bitcoin this year, their main business is not in cryptocurrency-related sectors, so Bitcoin is still a novelty.
The 15 listed firms in the picture above disclosed a large amount of financial information. Therefore, usually by evaluating the average price at which they buy Bitcoin, we can estimate how much their cryptocurrency assets have grown so far.
As per the data from Bitocin Treasuries, we can find that: those firms that bought Bitcoin during the second halving of Bitcoin (the Bitcoin reward generated by each block was reduced by half) to the first half of this year have now received at least 1 to 4 times return on investment.
Coin Citadel bought a large amount of Bitcoin before the exponential growth phase of Bitcoin's second halving, and its holding price has now spiked by 43 times.
The data seems to indicate that the current fluctuations in Bitcoin price are driven by investors buying Bitcoin in the spot market and recharging it into their wallets.
How many of these firms have bought Bitcoin? We have no idea of the exact number, but I wouldn't be surprised if more firms announce Bitcoin as a reserve asset in the coming months.
The major question these listed firms are now facing is: what does it mean for the firm to use Bitcoin as a reserve asset?
We do not have enough data to answer this question. But we can calculate for each firm when the value of a Bitcoin reaches, the total value of these firms' coins will equal firms' current market value.
Take MicroStrategy as an example. The firm currently has a market capitalization of $1.2 billion and it has 38,250 Bitcoin, indicating that once the price of Bitcoin reaches $30,000, the firm's Bitcoin assets will be as high as its market value.
And Square, another firm with a market cap of $8.2 billion, holds only 4709 Bitcoin. This means that when the price of each Bitcoin needs to reach the price of $18 million, the Bitcoin the firm holds can reach the market cap of the company.
With this in mind, you might think that the rise in Bitcoin price will have a greater impact on MicroStrategy than it has on Square. But we will see how it works.
If you are an individual investor, you don't need to undergo red-tape procedures. What you have to do now is to get ahead of institutional investors and invest in Bitcoin by using asymmetric information. What are you waiting for?
Disclaimer: The views and opinions do not necessarily reflect the views of ICoinTime. Every investment and trading move involves risk. You should conduct your own research when making a decision.