The Bitcoin Adoption Race Among Corporations
Bitcoin's Rise as a Key Financial Asset
This report was written by Tiger Research, offering analysis of strategies and factors driving the increasing adoption of Bitcoin by companies.
TL;DR
Corporate investment in Bitcoin is spreading: Corporate investment strategies are gaining momentum following the SEC's approval of Bitcoin spot ETF. This trend is now extending beyond Western markets to include Asian regions.
Why are corporations investing in Bitcoin: Bitcoin presents an appealing option for diversifying financial assets, improving fund management efficiency, and enhancing corporate value.
Asian participation and prospects: Asian companies are still in the early stages of Bitcoin investment. However, success stories like Metaplanet demonstrate the potential for market expansion. The lack of regulatory clarity and institutional infrastructure remains a significant challenge.
1. Introduction
Earlier this year, the U.S. SEC approved Bitcoin spot ETFs. This marked a major step in the institutionalization of crypto assets. Since then, more companies have included Bitcoin in their investment strategies. One example is MicroStrategy incorporating Bitcoin as a financial asset. This trend is gaining momentum. It is spreading from Western markets to Asia, becoming a global phenomenon. This report examines the strategies and factors driving the increasing adoption of Bitcoin by companies.
2. Companies Are Actively Investing in Bitcoin
Interest in Bitcoin is growing as its value gains recognition. At the national level, countries are also discussing Bitcoin investment. For example, El Salvador is actively purchasing Bitcoin. In the U.S., discussions focus on President-elect Trump's plan to stockpile Bitcoin. Poland and Suriname are also moving to make Bitcoin a strategic asset.
However, in most countries, Bitcoin investment remains a campaign promise. It will take time before these plans are implemented. The U.S. has not yet invested in Bitcoin but holds it to recover criminal proceeds. Additionally, central banks continue to favor gold over Bitcoin due to its volatility.
Government action on Bitcoin has been slow and limited. In contrast, corporate participation is gaining momentum. Companies like MicroStrategy, Semler Scientific, and Tesla have made bold investments in Bitcoin. This contrasts with the more cautious approach taken by most governments.
3. Three reasons why corporations are looking at Bitcoin
Investing in Bitcoin is no longer just a trend; it is emerging as a core financial strategy for companies. Bitcoin's appeal lies in its unique characteristics, with its value highlighted in three key ways:
3.1. Diversifying Financial Assets
Companies have traditionally structured their financial assets around stable options, such as cash and government bonds. These assets ensure liquidity and help manage risk. However, they offer low yields that may not keep pace with inflation. As a result, companies may face a real loss of value.
Bitcoin has become a compelling alternative to traditional assets, offering high return potential and portfolio diversification. Over the past five years, it has outperformed major traditional assets, including the S&P 500, gold, and bonds—even surpassing high-risk, high-return assets like junk bonds. This performance underscores Bitcoin's role not just as an alternative asset but as a valuable component of corporate treasury strategies.
3.2. Efficiency of Financial Assets
Another reason businesses are attracted to Bitcoin is its efficiency as a financial asset. Bitcoin trades 24/7, offering businesses flexibility in managing their financial assets. It also allows businesses to liquidate assets quickly, without the limited hours and complicated procedures of traditional financial institutions.
Concerns about the price impact when cashing out Bitcoin remain. However, recent increases in Bitcoin's market depth have addressed these concerns. According to Kaiko, Bitcoin's 2% market depth (the combined value of buy and sell orders within ±2% of the market price) has steadily increased. Over the past year, the average daily market depth reached around $4 million. This improvement in market liquidity shows that the environment for businesses operating with Bitcoin is now more stable.
3.3. Corporate Value Increase
Holding Bitcoin is not just a financial decision. It can also enhance corporate value and stock prices. For example, MicroStrategy and Metaplanet announced Bitcoin purchases, which led to significant increases in their stock prices. This strategy acts as both a marketing tool within the digital asset industry and a way to capitalize on the sector's growth.
4. Asian Companies Increasingly Investing in Bitcoin
Asian companies are in the early stages of Bitcoin investment but are gradually increasing their holdings. Companies like Meitu in China, Metaplanet in Japan, and Brooker Group in Thailand have adopted Bitcoin as a strategic financial asset. Nexon has also made significant Bitcoin purchases. Metaplanet has been especially active, acquiring 1,142 bitcoins over the past six months.
However, corporate participation in Asia remains limited. Asian companies hold less than 1% of global Bitcoin supply, mainly due to regulatory constraints in several countries. In South Korea, corporate entities cannot open accounts on cryptocurrency exchanges and face challenges in investing in overseas Bitcoin ETFs or launching crypto exchange-related funds. Formal investment in Bitcoin is nearly impossible for these companies.
Despite these regulatory challenges, the potential for increased participation from Asian firms is growing. Some companies are bypassing regulations by investing through overseas subsidiaries. Deregulation efforts are gaining traction, particularly in Japan. Leading investments by firms like Metaplanet are sparking interest and setting a precedent. These developments may pave the way for broader corporate participation in the future.
5. Closing Thoughts
Bitcoin investment is becoming a popular financial strategy for companies. However, Bitcoin's volatility remains a concern, especially due to external factors like international politics. The market crash in 2022 highlighted the risks for companies holding Bitcoin. Businesses should adopt a cautious approach by balancing Bitcoin with safer assets.
Additionally, a clear institutional framework is essential for Bitcoin's growth in corporate portfolios. The lack of clear guidelines on holding and accounting for crypto assets causes confusion. Once these uncertainties are resolved, Bitcoin could play a larger role in corporate portfolio diversification.
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