The Growing Trend of Corporate Bitcoin Adoption: Insights from Matt Hougan

In a significant memo released on January 13, 2025, Matt Hougan, the Chief Investment Officer (CIO) at Bitwise, emphasizes a critical observation: the trend of corporations acquiring Bitcoin for their treasuries is not only widespread but also more influential than many investors may realize. He states, “We’ll see hundreds of companies buy Bitcoin for their treasuries over the next 12-18 months, and their purchases will lift the entire Bitcoin market substantially higher.” This ambitious forecast underscores the transformative potential of Bitcoin in corporate finance.

Entitled “Companies Buying Bitcoin: An Overlooked Megatrend,” Hougan’s memo provides a comprehensive analysis of the shifting landscape of corporate investment in Bitcoin. He notes that while MicroStrategy and its vocal founder, Michael Saylor, often dominate media coverage, they are merely the most prominent examples of a rapidly growing corporate movement into the world of Bitcoin (BTC).

Interestingly, although MicroStrategy ranks 220th globally in terms of market capitalization—“a bit bigger than Chipotle and a bit smaller than Sherwin-Williams,” as per Hougan’s characterization—its acquisitions of Bitcoin have significantly outpaced the total amount mined in the last year. “Last year, MicroStrategy bought roughly 257,000 BTC, more than all the Bitcoin mined in 2024, which amounted to just 218,829 BTC,” he elaborates. Moreover, MicroStrategy has announced ambitious plans to raise over $42 billion for further Bitcoin purchases, a sum that roughly equals approximately “2.6 years’ worth of new supply” at current mining rates.

Corporate Giants Might Follow Suit

Hougan raises a thought-provoking inquiry regarding the implications of larger companies adopting a strategy akin to MicroStrategy’s, specifically referencing Mark Zuckerberg’s Meta, which he describes as being “20 times the size of MicroStrategy.” This raises questions about the potential ripple effects of such corporate giants entering the Bitcoin market.

While MicroStrategy’s actions have captured the spotlight, Hougan stresses that a multitude of other companies are already integrating Bitcoin into their financial strategies. “Currently, 70 publicly traded companies are known to hold Bitcoin on their balance sheets,” he reveals. This collection includes both cryptocurrency-oriented firms like Coinbase and Marathon Digital, as well as established players in the conventional sector, such as Block, Tesla, Semler Scientific, and Mercado Libre. Collectively, these companies (excluding MicroStrategy) hold a significant total of 141,302 BTC. Additionally, the landscape of bitcoin ownership extends to private enterprises, with firms like SpaceX and Block.one reportedly owning at least 368,043 BTC combined. This suggests that MicroStrategy’s influence may dwindle, comprising less than half of the corporate BTC market in the foreseeable future, as Hougan predicts.

Exploring the Surge in Bitcoin Adoption by Companies

Hougan identifies two primary challenges that have traditionally hindered corporate adoption of Bitcoin: reputational risks and unfavorable accounting regulations. He articulates how these barriers have begun to break down, leading to increasing corporate interest in Bitcoin. “Just last year, the CEO of a major publicly traded company faced significant obstacles in adding Bitcoin to their treasury assets due to fears of negative media portrayals, shareholder litigation, and regulatory scrutiny,” he notes. However, he contends that these reputational risks have diminished considerably in recent months. Following the recent elections, the atmospheres in Washington have become more accommodating to cryptocurrencies, making it increasingly commonplace—and even appealing—for corporations to hold Bitcoin.

Additionally, Hougan refers to a new accounting guideline known as ASU 2023-08 from the Financial Accounting Standards Board (FASB). This guideline shifts Bitcoin’s classification from an “intangible asset” subject to impairment testing—forcing companies to depreciate its value in the event of price drops—to a more favorable “mark-to-market” system that allows for profit booking as the asset appreciates. “If 70 companies were willing to take the leap of adding Bitcoin to their balance sheets when its accounting implications leaned solely toward depreciation, imagine the number that will add it now,” Hougan ponders. He speculates on the possibilities: “Could it be 200? How about 500 or even 1000?”

Addressing the common skepticism surrounding corporate Bitcoin investments, Hougan explains that various motivations drive these decisions, echoing the sentiments of individual investors. “Some companies are intrigued by the prospects of profit, others are concerned about the depreciation of the dollar, and many aim to showcase their alignment with the Bitcoin community. A portion may even be acting solely on intuition,” he elaborates.

A Call for Insight Through AI legalese decoder

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Ultimately, while Hougan recognizes the significance of understanding individual motivations behind corporate Bitcoin adoption, he posits that the overarching metrics of demand are far more critical. “Simply observe the numbers and consider two pivotal questions: Where is all of this corporate demand destined, and what implications will it have for the market?” he suggests.

In concluding his memo, Hougan echoes a bullish sentiment, predicting that should major corporations emulate MicroStrategy’s route—now bolstered by favorable reputational and accounting factors—the resultant influx of corporate investment will likely propel Bitcoin’s price significantly higher over the next year. “My prediction: We can expect to see hundreds of companies purchasing Bitcoin for their treasuries in the next 12 to 18 months.” – Matt Hougan, Bitwise CIO

As this trend unfolds, it will be worthwhile to monitor the ramifications on the Bitcoin market and corporate strategies alike. Currently, Bitcoin is trading at an impressive $95,039.

Featured image from YouTube, chart from TradingView.com