Bitcoin has had a stellar 2021 so far, increasing 96% year-to-date (as of 2 Dec 2021). This performance is widely attributed to growing institutional adoption.
With high-profile companies like Tesla, Microstrategy, and Square adding Bitcoin to their balance sheet, the role of cryptocurrency in treasury is becoming a hot topic for institutions.
Bitcoin saw a rapid rise up to US$62,000 in the first four months of 2021, likely driven by the increase in demand brought about by institutions looking to add to their balance sheets.
However, with China’s crackdown on Bitcoin mining and trading, coupled with Elon Musk’s concerns over the environmental impact of mining, Bitcoin took a large hit in May, scraping the US$30,000 mark.
The downturn was short-lived as investor confidence in Bitcoin returned, which set Bitcoin on a rally towards an all-time high of around US$67,000 in October. This happened despite the People’s Bank of China declaring all crypto transactions and mining activities illegal, highlighting the resilience and maturity of Bitcoin’s price.
Bitcoin is growing its reputation as an asset capable of mitigating against the uncertainties of global economics. With high levels of money printing and low-interest rates, cash value has continuously deteriorated.
For many businesses, including those that run a USD-denominated book, local currency volatility can cause substantial price fluctuations. As Bitcoin and other digital currencies are not subject to the debasement associated with unsustainable fiscal and monetary policies, demand for payment in Bitcoin will likely rise.
Bitcoin and other digital currencies have shown their ability to generate greater yield than cash reserves while maintaining the level of liquidity required by institutions. Staking, yield-farming, and liquidity provision are just some of the ways institutions can increase the yield in digital asset reserves held.
Treasury Management International (TMI) and Eqonex are jointly organizing an online webinar titled “Exploring Cryptocurrency in Treasury,” where a panel of distinguished industry experts, including EQONEX CEO Richard Byworth, will come together to explore the applications of crypto for treasuries.
Watch and register for free here: https://treasury-management.com/events/exploring-cryptocurrency-in-treasury/
If you are keen to learn how EQONEX can help your business buy and store cryptocurrencies, please reach out to [email protected], and we will promptly get in touch with you.
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