Unprecedented stimulus and the technical ease of using Bitcoin in financial transactions will likely push up the value of the cryptocurrency and make it more attractive to corporate treasurers as an inflation hedge, MicroStrategy CEO Michael Saylor said in a Blockworks webinar.
"We never in modern history had a situation where the cost of capital was so extreme" and "where we could actually store monetary energy in an open global digital network," Saylor said, adding "those two things cause you to reassess your strategy as a corporation or as an investor or just as an individual."
- In a March 1 regulatory filing MicroStrategy — a provider of business intelligence software — reported the purchase of 328 Bitcoins for a total of 90,859 tokens, putting the current value of its holdings in the cryptocurrency at approximately $4.9 billion.
Eighty-four percent of financial executives said last month that they do not plan to ever include Bitcoin among their corporate assets, citing volatility as the cryptocurrency's No. 1 drawback, according to a Gartner survey.
Among the 77 respondents, only 5% said they plan to hold Bitcoin as a corporate asset this year, Gartner said, noting that the survey included 50 CFOs.
Risk aversion of company boards, slow adoption of Bitcoin in finance, and regulatory concerns also discourage acceptance of the cryptocurrency, Gartner said.
Still, Bitcoin has gained high-profile adoption by some organizations this year while surging about 87%. Goldman Sachs President John Waldron this month said the investment bank is among the "big believers in digital money."
"There's no question in our mind, there's going to be more digital commerce, a lot more, an explosion in digital commerce," Waldron told the Wolfe Research fintech forum on March 10, according to a transcript of his remarks. "And digital money will explode likewise."
While channeling MicroStrategy cash into Bitcoin, Saylor has championed the cryptocurrency among other C-suite leaders, including Tesla CEO Elon Musk.
Tesla said last month in a filing with the Securities and Exchange Commission that it bought $1.5 billion worth of Bitcoin and plans to start accepting the cryptocurrency as a form of payment.
BlackRock Chief Investment Officer Rick Rieder said last month without elaborating that the asset management company has started to "dabble" in Bitcoin.
BNY Mellon, the largest custody bank in the U.S., said on Feb. 11 that it will hold, transfer and issue cryptocurrencies on behalf of its asset-management clients. And Mastercard said on Feb. 10 that it would support certain digital assets on its network this year.
"Monetary inflation" will push up Bitcoin by tilting "the balance of power in favor of scarce assets that are not valued based upon future cash flows to the detriment of assets that are valued based upon future cash flows," Saylor said.
"There's no reason Bitcoin shouldn't expand to flip gold and then to replace negative-yielding sovereign debt and then to replace money markets and savings accounts and cash accounts," he said.
Among the 16% of respondents in the Gartner survey expressing willingness to adopt Bitcoin as part of their financial strategy, 5% said they plan to hold the cryptocurrency this year, 1% plan their adoption in 2022 or 2023 and 9% are looking to 2024 or later, Gartner said.