- Data from the exchange Kraken indicates an increase in companies adopting Bitcoin as a reserve asset.
- Assets under management by Grayscale exceed $15.5 billion with the majority allocated to BTC Trust.
Crypto exchange Kraken has made a prediction about the level of adoption that Bitcoin will reach in the coming year. In a paper presented by Bitcoin’s Kraken strategist, Pierre Rochard, the adoption level of Bitcoin will explode due to its increase as a store of value. Rochard said:
My boldest prediction is that if we take the S&P 500, the world’s largest corporations, I think that by the end of 2021, more than half of them will have Bitcoin on their balance sheet, and I think that will be driven by simple economics, which is that issuing shares to buy Bitcoin causes your stock price to go up more than the dilution.
Rochard’s predictions are supported by the changes in the reserve strategy that companies like MicroStrategy and Square have made. By allocating a percentage of their cash flow to Bitcoin, these companies initiated a domino effect. In that sense, Rochard adds:
And so because that is the case – we have market data showing this – we’re going to see a huge amount of corporate adoption of Bitcoin, and we’ll even see like what [MicroStrategy CEO] Michael Saylor is doing, corporations issuing large quantities of bonds, fixed-income instruments – whether they’re convertible or whatever – in order to just bulk buy Bitcoin.
MicroStrategy’s debt issuance to acquire more Bitcoin was rejected by banking institutions. The company’s shares received a penalty to their score, moving them from a “neutral” recommendation to a “sell” recommendation as reported by CitiBank.
However, the high demand allowed the Saylor-led company to increase its offer from $400 million in debt to $600 million. Indicating that the market is hungry for similar offerings. Rochard believes that eventually, this will lead to total dominance of Bitcoin as a medium to settle any transaction.
They’re going to say, I don’t want USD. I want Bitcoin. Because if you give me USD, I know that it’s going to lose its value very quickly. And so I want you to pay me in Bitcoin. And so, really, it doesn’t actually matter whether the sender is sending them USD or Bitcoin.
And so I think that as more and more companies join the Bitcoin standard and start using Bitcoin as their treasury reserve asset, then they will want to get paid in Bitcoin so that they avoid the transaction costs of having to convert USD into Bitcoin.
Grayscale exceeds $10 billion in the Bitcoin Fund (BTC)
The investment firm Grayscale has been one of the entities that have adopted Bitcoin in its business model. In 2020, Grayscale’s assets under management (AUM) have doubled and are at record levels. Currently, they have reported a total of $15.5 billion in AUM.
Of that amount, $13 billion is allocated to the Grayscale Bitcoin Trust. By comparison, the second-largest funded Grayscale product is the Grayscale Ethereum Trust with $1.8 billion, followed by the fund at Litecoin with $104 million and the fund at Ethereum Classic with $79 million.
As reported by CNF, Grayscale has contributed to the increased buying pressure for Bitcoin. The firm has purchased up to 77% of all newly mined Bitcoin. If the trend continues in 2021, experts predict a liquidity crisis and a further increase in the price of the cryptocurrency into uncharted territory.