While the cryptocurrency markets have been in a bit of a swoon of late, that hasn’t stopped listed companies from gobbling up digital currency, says a European digital assets investment manager.
The data from Nickel Digital Asset Management shows 19 listed companies with a combined market cap north of $1 trillion have invested $6.5 billion in Bitcoin. That is a $2.2 billion return on their $4.3 billion original buy.
Seven of the companies bought in 2020, while eight joined to market in 2021. That includes Tesla, who has driven attention to the sector. Most of the companies (13) are either American or Canadian, while the remainder are from Europe, Turkey, Hong Kong and Australia.
Nickel also learned $43.2 billion of bitcoin is held in closed-ended trusts and exchange-traded products. Again, the holdings are primarily from North America at 65 per cent.
This momentum should continue as 81 per cent of institutional investors and wealth managers surveyed by Nickel earlier this year expect to see more corporate deployment of bitcoin in their treasury reserves, with 29 per cent expecting those gains to be dramatic.
“A growing number of corporations have recently made significant multi-billion allocations to bitcoin as part of their treasury reserve strategies,” Nickel Digital CEO Anatoly Crachilov said. “This, coupled with a confirmed inclusion of crypto assets in the portfolio construction by leading global asset managers such as Paul Tudor Jones, Bill Miller, Ruffer, and Guggenheim Partners, is a very important endorsement for Bitcoin’s emerging functionality of the hedge against inflation.
“The COVID-19 crisis and the expansionary monetary policies implemented by the central banks in response to the crisis have dramatically changed the outlook for fiat currencies, heightening the risk of currency debasement. This, coupled with the increasingly inflationary guidance by Fed and an ever-expanding pile of $18 trillion of negatively yielding global bonds, has encouraged many corporations to contemplate an allocation to alternative assets.”
Mr. Crachilov said Bitcoin is a unique non-discretionary asset, given its finite supply. Further benefits include its immutability, verifiability and predictable issuance schedule. Because the supply creation rate falls by half every four years it has anti-inflationary appeal, he added.
Its volatility occurs because it is in the beginning stages of its adoption curve, Crachilov stated. That should decline as larger players bring stability and larger liquidity pools.
Nickel Digital has four digital asset funds: the market-neutral Digital Asset Arbitrage Fund; the
Diversified Alpha (Digital Factors) Fund; the Digital Leaders DeFi Fund and the Digital Gold Institutional Fund.