Accounting rule changes have turned Bitcoin from risky venture to corporate must-have – Bitwise

Bitwise Chief Funding Officer Matthew Hougan believes that firms including Bitcoin (BTC) to their stability sheets are not an anomaly, however a burgeoning megatrend that might remodel the crypto market this 12 months.

In a single recent note For purchasers, Hougan highlighted that MicroStrategy is making headlines with its aggressive BTC accumulation technique. The corporate has acquired roughly 257,000 BTC, greater than all of the Bitcoin mined final 12 months, and plans to lift one other $42 billion to proceed its acquisitions.

Hougan famous that the development goes effectively past MicroStrategy. As of January 14, 70 listed firms, together with family names equivalent to Tesla, Block and Mercado Libre, have Bitcoin on their stability sheets.

These firms collectively personal 141,302 BTC, whereas personal firms equivalent to SpaceX and Block.one have disclosed holdings of at the least 368 BTC.

Regulatory adjustments

Based on Hougan, the breakthrough is the introduction of ASU 2023-08 by the Monetary Accounting Requirements Board (FASB). This rule permits publicly traded firms to mark Bitcoin holdings at market worth, permitting them to ebook income when the worth of Bitcoin rises.

Beforehand, Bitcoin was handled as an ‘intangible asset’, forcing firms to jot down down its worth when the worth fell, however unable to ebook income when it rose.

As reputational dangers diminish and the accounting panorama turns into extra favorable, Hougan predicts an explosion within the variety of firms shopping for Bitcoin. He estimates that the present variety of 70 may develop to a whole bunch, even 1000’s, within the subsequent 12 to 18 months.

Moreover, Hougan states that firms purchase Bitcoin for a similar causes as people. Some see it as a hedge towards greenback depreciation, others as a speculative device to spice up inventory costs, and nonetheless others as a sign of innovation to draw clients and expertise.

Whereas motivations range, he believes the inflow of company demand has the potential to drive Bitcoin costs considerably larger, particularly as main gamers like Meta and others take into account entry.

Hougan concludes the paper by saying that retail traders needn’t perceive why each firm buys Bitcoin. As an alternative, they need to ask themselves the place this demand goes and what it means for the market.

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