Public companies have done a good job of increasing their Bitcoin holdings over the past year, and now own around $13 billion worth of BTC. Despite this surge, Bitcoin's performance has lagged behind traditional assets like the S&P 500, raising concerns about its market strength. Analysts, including Mike McGlone and Arthur Hayes, suggest that Bitcoin's future may hinge on broader economic factors, like central bank policies and global liquidity conditions. Meanwhile, Stacks started with its Nakamoto upgrade that aims to boost Bitcoin's utility, but the STX token’s price dipped amid the broader market downturn.
Bitcoin Holdings by Public Firms Surge
Publicly listed companies have greatly increased their Bitcoin (BTC) holdings over the past year, from $7.2 billion to almost $13 billion. According to data from Bitbo, 42 publicly traded firms now hold a total of 335,249 Bitcoin, which is worth about $13 billion. This certainly proves that there is a growing interest in Bitcoin as a strategic asset among major corporations.
Some of the public companies holding Bitcoin (Source: Bitbo)
The trend started in August of 2020 when business intelligence firm MicroStrategy made headlines by buying more than 21,000 Bitcoin, and declaring it as its primary treasury reserve asset. In August of 2024, MicroStrategy has expanded its Bitcoin holdings to 226,500 BTC.
After taking note of the increasing corporate interest in Bitcoin, investment manager Nickel Digital Asset Management commissioned a survey to get an idea of the institutional sentiment towards holding the asset. The survey included 200 institutional investors and wealth managers across various countries, including the United States, the United Kingdom, Germany, Singapore, Switzerland, Brazil, and the United Arab Emirates.
The findings revealed that 75% of organizations that are already involved in the crypto space believe that publicly listed companies should hold Bitcoin. Additionally, 26% strongly support its use as a reserve asset.
The survey participants collectively manage $1.7 trillion in assets, and are optimistic about the future growth of Bitcoin holdings among public companies. 58% of the respondents believe that in the next five years, 10% or more of publicly traded firms will have Bitcoin on their balance sheets. Additionally, 8% predicted that 25% or more of these companies would adopt Bitcoin in the same timeframe.
Nickel Digital's CEO and founding partner, Anatoly Crachilov, believes that the survey results reveal the long-term value institutional investors see in Bitcoin. He noticed that these investors view exposure to digital assets as a crucial component of reserve allocation to help mitigate the risk of currency debasement.
Total Bitcoin by category (Source: Bitbo)
Despite the big increase in corporate Bitcoin holdings, the 335,249 BTC held by public companies only represents 1.6% of Bitcoin’s total supply, which is capped at 21 million. Luckily, this also means that there is potential room for further growth as more companies explore Bitcoin as a strategic reserve asset.
Bitcoin Lags Behind S&P 500
While publicly listed companies are stocking up on BTC, the crypto's recent performance suggests it is still struggling to regain its footing. This is especially clear when compared to traditional risk assets like the S&P 500. Mike McGlone, a senior commodity strategist at Bloomberg Intelligence, pointed out that Bitcoin's value relative to the S&P 500 is still well below its all-time highs, which could indicate potential systemic weakness.
In his latest analysis, McGlone suggested that Bitcoin may be experiencing a "hangover" from previous market exuberance. Currently, BTC/USD is trading at roughly 11 times the value of the S&P 500, which is a big drop from its peak of 15 times in the first quarter of 2020. According to McGlone, this could signal a broader shift in the market, with Bitcoin potentially moving toward a lower ratio of 7x compared to the S&P 500.
He also questioned whether Bitcoin, which is often referred to as the "fastest horse" in the race among risk assets, might be signaling that the race is actually over. This theory is supported by Bitcoin's underperformance relative to other assets like gold, which recently reached new all-time highs.
Bitcoin's price action has been very volatile, and has been hovering around $60,000 since late August, with brief dips to $58,000 during a recent market correction. Popular trader Crypto Chase believes that the ongoing consolidation phase, which has continued for months, could either lead to a clear breakout towards new all-time highs or result in a lower low. However, he sees a potential drop as a buying opportunity, and suggests it could be a bottom before Bitcoin resumes its upward trajectory.
Arthur Hayes Warns of Fed's "Sugar High" Impact
Arthur Hayes, co-founder of BitMEX, compared the recent actions of the United States Federal Reserve to a short-term "sugar high" for the economy that could have potential ripple effects for the crypto market. In a recent Medium article, Hayes connected central bank decisions, particularly US Federal Reserve rate cuts, to a potential shift in investor behavior towards Bitcoin and other cryptocurrencies.
Hayes specifically pointed towards the potential unwinding of the Japanese yen carry trade as a key risk, and stated that while lower interest rates may temporarily support traditional markets, they could also lead to serious implications for fiat currencies and crypto assets. He also suggested that as the interest rate differential narrows, the yen is likely to strengthen, which could cause global market turbulence and prompt central banks to expand their balance sheets. This expansion, which Hayes refers to as "real food," could inject liquidity into the markets that could inflate the value of finite-supply assets like Bitcoin.
Hayes shared some details about the yen carry trade strategy, where investors borrow in yen at low interest rates to invest in higher-yielding assets in other currencies. However, he predicts that as central banks reduce interest rates, the appeal of this strategy diminishes, leading to a stronger yen and the unwinding of these trades.
Screenshot from Hayes’ research note (Source: Arthur Hayes)
Hayes is optimistic about the outlook for crypto, and believes good fiat liquidity conditions will be a positive factor for Bitcoin holders. He also predicts that if $301 billion in Treasury bills are issued by year-end, Bitcoin could quickly recover from any dips caused by yen strength, and could even potentially reach $100,000.
Stacks Begins Nakamoto Upgrade
Meanwhile, the layer-2 blockchain Stacks has started its Nakamoto upgrade that will make transactions faster and more efficient. This upgrade is named after Bitcoin's creator Satoshi Nakamoto, and will decouple Stacks' block production schedule from that of Bitcoin. Network operators have a two-week window to implement the upgrade, which will culminate in a hard fork completing the process.
The Nakamoto upgrade introduces a new method for producing Stacks blocks using a proof-of-transfer consensus algorithm, where users burn Bitcoin to mine Stacks blocks and receive rewards. This process started in April, with block "signers" validating tenures of transactions, which are periods during which miners produce multiple blocks that are ultimately settled on Bitcoin.
Stacks’ goal is to enhance Bitcoin’s utility by enabling smart contracts and decentralized finance (DeFi) functions, using Bitcoin as the underlying layer. As part of this initiative, Stacks is launching sBTC, a bridging asset that allows users to integrate their Bitcoin into the Stacks economy.
STX 1d price chart (Source: CoinMarketCap)
Despite the upgrade, the price of the STX token plunged by more than 9% over the past 24 hours of trading. As a result, STX is worth $1.59 at press time. This decline in the price of STX aligns with a broader downturn in the crypto market.
