More and more companies are actively showing an interest in Bitcoin. Not just as a payment method, but also as part of their long-term investment strategy. Nearly two dozen companies now have a Bitcoin Treasury, and all but one are in profit so far.
The Purpose of a Bitcoin Treasury
For a lot of companies, there needs to be a plan B to thwart any financial pressure. COVID-19, for example, has shaken up the financial sector in many ways. It makes stocks less appealing, and introduces negative interest rates across the board. Far from an ideal situation, forcing these companies to look at other options on the market.
As it turns out, the concept of a Bitcoin Treasury makes a lot of sense.. Companies and corporations allocate a percentage of their “foreign holdings” to Bitcoin in the hopes of achieving financial stability and future profit. Unlike other assets, Bitcoin has a strong year-over-year performance. It is also one the most resilient assets on the market today.
Looking at the number of companies with an active Bitcoin Treasury, things have gotten very interesting recently. More and more firms, regardless of their individual market valuation, are exploring this option. Additionally, they are not shy of allocating a lot of Bitcoin to their treasury either. Values range anywhere from 62.8 BTC to 456,537 BTC.
What is even more remarkable is how virtually all companies exploring this option are in profit. The one exception is HUT 8 MINING corp. A loss of $2 million may seem rather steep. In reality, this can easily turn into a $5 million profit in a week from today. Bitcoin is an unpredictable market, even under the best of circumstances.
Historical Bitcoin Price Performance
Going by the historical price performance, the appeal of a Bitcoin Treasure becomes more apparent. It is a very strong-performing asset that tends to note relatively big gains over the span of a year. It is not something for short-term speculation, though. Companies committing to this approach will need a clear long-term vision to make the most of their investment.
Granted, there will be some highs and lows along the way. That is par for the course with any investment, after all. Bitcoin is perhaps more volatile than any other asset class, but that is also part of its appeal. Those who want to actively commit financial reserves to this approach need to be prepared for the good times, but also the bad times.