Analysis from a London-based digital assets specialist shows where ownership of bitcoin is spreading as the cryptocurrency continues to establish a mainstream presence.
New research from London-based Nickel Digital Asset Management reveals that 19 listed companies with a market cap of over $1 trillion have around $6.5 billion invested in bitcoin, originally paying $4.3 billion for the currency.
Seven of those purchased bitcoin in 2020, and roughly eight new entrants, including Tesla, made allocations in the first four months of 2021, its research found.
While Tesla CEO Elon Musk has been at the centre of recent wild price swings - vacillatiing over whether bitcoin is an acceptable currency for purchasing a Tesla on account of its huge energy drag - the business remains invested in the cryptocurrency.
Nickel found a notable bias among US and Canadian companies allocating into bitcoin. Among the 19 firms reviewed, 13 are listed in the US and Canada, three are European, one is Turkish, and one each is listed in Hong Kong and Australia.
Its analysis also showed that a further 17 listed companies have purchased bitcoin without revealing how the currency figures in portfolio construction.
US and Canadian funds account for a whopping 65 per cent of bitcoin holdings.
Further research by Nickel, set up by ex Goldman Sachs and JP Morgan managers two years ago, found that roughly $43 billion worth of bitcoin is held through various bitcoin closed-ended trusts and exchange-traded products on behalf of clients that include a range of retail investors, asset managers and, increasingly, institutional asset allocators.
Supply and demand
There are currently around 18.5 million bitcoins in circulation; that is around 88 per cent of the total finite supply, which is capped at 21 million on the protocol level. The remaining 12 per cent will be issued over the next 120 years, with the last bitcoin coming into circulation in 2140, as determined by its hard-coded issuance schedule.
Proponents say it is this transparent and stringent monetary policy that continues to attract investors to the currency wanting refuge from loose monetary policies of central banks around the world.
“The COVID-19 crisis and the expansionary monetary policies implemented by the central banks in response to the crisis have dramatically changed the outlook for fiat currencies, heightening the risk of currency debasement," Anatoly Crachilov, co-founder and CEO of Nickel Digital, said. "This, coupled with the increasingly inflationary guidance by Fed and an ever-expanding pile of $18 trillion of negatively yielding global bonds, has encouraged many corporations to contemplate an allocation to alternative assets."
The group says the growing number of corporates making multi-billion allocations into bitcoin are doing so as part of their treasury reserve strategies.
The fact that major fund managers such as Paul Tudor Jones, Bill Miller, Ruffer, and Guggenheim Partners are including bitcoin in their portfolio construction is another mainstream "endorsement," Crachilov argues, and shows that the currency is emerging as an inflation hedge.
Hedge fund billionaire Tudor Jones attacked the Fed on Monday, saying that it is risking its credibility by keeping monetary policy so loose and "juicing an economy that’s already red hot."