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- About 25% of S&P 500 firms are to hold Bitcoin in 5 years, as predicted by market experts.
- Strategy pioneered this trend with over 120 more to go if current projections play out.
Many traditional firms are beginning to show strong support for adding Bitcoin (BTC) to their balance sheet as the asset gains widespread attention. Elliot Chun, a managing partner at Architect Partners, predicted that a quarter of the S&P 500 would hold Bitcoin in their balance sheet by 2030.
Treasury Managers Faces Pressure
In a recent blog post, Elliot Chun said the shift toward Bitcoin would stem from treasury managers feeling compelled to experiment.
“If you tried it and it worked, you’re a genius. If you tried it and it didn’t work, you at least tried. Either way, you likely keep your job. But if you didn’t try it and can’t provide a good reason, your job may be at risk,” says Chun, adding that “Doing nothing is no longer a defensible strategy.”.
The primary thesis for holding BTC as a treasury reserve asset is that it serves as a hedge against inflation. Proponents also claim it offers a tool for treasury diversification and risk management.
Michael Saylor’s Strategy set the pace for traditional firms holding Bitcoin in their balance sheet on August 20, 2020. According to data from BitcoinTreasuries.NET, Strategy is the largest corporate Bitcoin holder of all 89 public-traded firms currently holding Bitcoin.
As noted in our earlier post, Strategy is set to raise $711.2 million through a preferred stock offering, with funds directed into Bitcoin accumulation. The firm now has over 506,000 BTC on its balance sheet, reinforcing its bold treasury model amid rising institutional adoption.
Electronics retail firm GameStop could soon join Strategy’s move towards Bitcoin accumulation. In a recent update, we covered GameStop revealed its intention to invest cash and future debt in Bitcoin.
Meanwhile, Tesla and Block are the only S&P 500-listed firms that have invested in Bitcoin. This means at least another 123 S&P 500 firms would need to invest in Bitcoin by 2030, based on Chun’s prediction.
Is Strategy’s BTC Accumulation Approach Sustainable?
The adoption of Bitcoin treasury strategies has positively impacted firms holding the coin, with a corresponding increase in share prices. Since its first Bitcoin investment in 2020, Strategy’s stock has surged over 2,000%, outperforming Bitcoin by 781.1% and the S&P 500 by 64.8%.
Despite the increased adoption, recent developments have raised questions about the sustainability of its aggressive Bitcoin acquisition strategy. In particular, there are rising concerns about mounting debt and potential stock dilution.
Strategy recently announced a $500 million issuance of Perpetual Strife Preferred Stock (STRF), offering a fixed 10% annual cash dividend paid quarterly. The company faces over $1 billion in debt due by 2027, and its latest fundraising efforts suggest growing liquidity concerns.
While Strategy has positioned it as a key player in crypto, its sustainability towards BTC accumulation remains under scrutiny.
