Matt Hougan, Chief Investment Officer (CIO) at Bitwise, has a bold prediction: hundreds of companies will buy Bitcoin as a financial asset over the next 12 to 18 months. The move, which Hougan describes as “megatrend observed,” with the potential to significantly influence the trajectory of the Bitcoin market.
MicroStrategy: The Torchbearer of Corporate Bitcoin Adoption
MicroStrategy, led by Michael Saylor, has become synonymous with corporate Bitcoin adoption. Although it is only 220th globally by market capitalization, the company's influence on the Bitcoin market is disproportionate. In 2024 alone, MicroStrategy received 257,000 BTC – higher than the total amount of Bitcoin mined in that year (218,829 BTC).
The company's ambitions show no signs of slowing down. It recently announced plans to raise $42 billion for additional Bitcoin purchases, equivalent to 2.6 years worth of annual Bitcoin production at current rates.
Beyond MicroStrategy: A Growing Movement
MicroStrategy's activities are just the tip of the iceberg. According to Hougan, 70 publicly traded companies already hold Bitcoin on their balance sheets. This list includes not only native crypto companies like Coinbase and Marathon Digital but also mainstream giants like Tesla, Block, and Mercado Libre. Together, these companies – excluding MicroStrategy – own 141,302 BTC.
Private companies are also important players. SpaceX, Block.one, and others together hold at least 368,043 BTC, based on data from BitcoinTreasuries.com. Hougan clarifies that MicroStrategy's share of the physical Bitcoin market is already below 50% and is likely to decline further as adoption grows.
What will happen when larger companies, such as Meta, which is currently considering a shareholder proposal to add bitcoin to its balance sheet – 20x the size of MicroStrategy – start reporting on MicroStrategy's strategy?
Why Bitcoin corporate adoption is poised to accelerate
Two major barriers have historically hindered the corporate adoption of Bitcoin: reputational risk and unfavorable accounting regulations. Both have changed a lot in recent months:
1. Reduction of Reputational Risk
Until recently, companies had great difficulties in accepting Bitcoin. CEOs and boards were concerned about shareholder lawsuits, regulatory scrutiny, and negative media coverage. However, as Bitcoin gains acceptance at institutional and governmental levels, these fears are dissipating. After the election, Bitcoin has increased bipartisan support in Washington, making it more “common — and even popular — to own Bitcoin,” according to Hougan.
2. Favorable accounting changes
The Financial Accounting Standards Board (FASB) introduced new guidance, ASU 2023-08, which will fundamentally change how Bitcoin is accounted for. Previously, companies had to mark Bitcoin as an intangible asset, forcing them to write down its value when prices went down but preventing upward adjustments when prices rose.
Under the new rule, Bitcoin can now be marked to market, allowing companies to recognize profits as the price appreciates. This change removes a lot of confusion and is expected to lead to a huge growth in physical Bitcoin holdings.
The “Why” Behind Corporate Bitcoin Adoption
Corporate incentives to hold Bitcoin mirror those of individual investors. Hougan describes several reasons:
- Hedge Against Inflation: Bitcoin is seen as a hedge against currency devaluation.
- An estimate: Some companies aim to increase stock prices through the emergence of Bitcoin.
- Cultural Significance: Holding Bitcoin signifies an alignment with innovation and attracting a younger, tech-savvy customer base.
- Strategic Problems: For many, Bitcoin ownership is a calculated gamble.
Hougan says the incentives behind corporate adoption are smaller than the demand. “You only have to look at the numbers,” he writes. “Where does all this demand seem to be going? And what would that mean for the market?”
A megatrend that could redefine markets
Hougan's memo paints a supportive picture of Bitcoin's future. If hundreds of companies follow MicroStrategy's lead, the cumulative demand could move the price of Bitcoin significantly higher in the coming year. With 70 companies already on board under less favorable terms, the platform is poised to explode in adoption.
This move not only highlights Bitcoin's evolving role as a financial asset but also underscores its growing acceptance as a mainstream financial tool. For mature investors, the implications are clear: the next 18 months could mark an important period in Bitcoin's journey from speculative asset to institutional cornerstone.
The time to buy is now
With reputational risks receding, accounting regulations evolving, and demand accelerating, the integration of Bitcoin into corporate finances seems inevitable. Hougan's analysis invites investors to consider the broader implications:
If corporations really do adopt Bitcoin at scale, what could that mean for the future of the market? For savvy investors, the answer may be to act sooner rather than later.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.
