Bitcoin has been legal tender in El Salvador since last week. I do not expect the US, EU or China will follow suit shortly.But it is clear that something is happening and there is more chance than ever that Bitcoin will have a big impact on the global financial system. So who is the main hodler today, and what follows from this?
It's been just over a year since Michael Sailor, co-founder and CEO of MicroStrategy, began implementing the idea of using bitcoin as a treasury asset.
For MicroStrategy, it started with 20,000 BTC,purchased in August last year. Today, the company's balance sheet contains more than 100,000 BTC, and many public companies (mostly small so far) have taken part in this.
Plus, El Salvador has now officially made bitcoin legal tender and currently uses 550 BTC.
Of course, Michael Sailor was not the first to include satoshi in his portfolio.
So who is the main hodler today?
Here's a breakdown based on data from BitcoinTreasuries.net.
About 7.9% of the total supply of bitcoins today is held in treasury funds, which is starting to gain in importance.
If we go through the categories, we get the following:
- ETF-like products continue to dominate with a 4.1% share of total bitcoin supply;
- private companies report that they account for 1.6% of the total;
- governments hold 1.2%;
- public companies - 0.9%.
Of course, this is the lower limit for the amount of BTC inTreasury funds, since the only really safe categories are investment vehicles like ETFs and public companies. After all, they are obliged to disclose information and report what they hold on their balance sheet.
And private companies don't have to publicly say anything about their bitcoins. An example is SpaceX, which we know is a hodler, but we have no idea to what extent.
And reporting on what they actually dogovernment is even less transparent. I mean, who knows how many bitcoins have been seized by law enforcement and are now stored in their wallets around the world.
So it is no exaggeration to suggest that the 7.9% value is possibly 1%, 2%, or 3% higher for the categories listed.
And when we see that only GBTC (Grayscale's trust product) covers about 3% of the total supply of bitcoins, one can only imagine how much volume a bitcoin ETF could reach in the US.
Now it is interesting to see how the situation is developing for public companies. Take a look at the bottom of the diagram above. Several large circles and many small ones.
MicroStrategy is heavy.In fact, one could argue that at the moment this company has more place in ETFs than in the category of public companies. My guess is that everyone who has bought an MSTR in the past year has done so in order to own some form of bitcoin.
Following MicroStrategy - Tesla.Surely Tesla's main business has nothing to do with cryptocurrencies (contrary to what may seem from Elon Musk's Twitter). Thus, it can be said that Tesla is using Bitcoin as a reserve asset.
In third place is Square.It can be argued that the company is partially engaged in the cryptocurrency business. But for the most part, this is not her main focus. Thus, Square also uses bitcoin as a reserve asset.
If you go through the list of Bitcoin Treasuries.net further, you can see that most other public companies are engaged in either long-term investing in bitcoin (as in holdings or fintech companies), or mining it.
A year after Michael Sailor begantouting the benefits of bitcoin as a reserve asset, several public companies that do not engage in fintech have included it on their balance sheets.
This is reminiscent of a quote from Bill Gates:
"Most people overestimate what they can do in one year and underestimate what they can do in ten years."
Obviously, small companies or those already tuned into the bitcoin space will be the first to deposit cryptocurrency into their balance.
For everyone else, it will take longer.
Therefore, I would say that it is worth returning to this topic regularly before drawing any conclusions.
But if you had invested in those public companies that trade bitcoin when Michael Sailor was just starting to make a fuss about it, you would be doing pretty well now.
A while ago, we introduced the idea of a Bitcoin Treasury Index that would include:
- public companies traded on the American stock exchange (liquidity criterion);
- companies holding at least 0.005% of the total supply of bitcoins (treasury criterion).
In this index, each share is weighted by the number of bitcoins they have in the Treasury fund.
The current lineup looks like this:
And if we take the third halving of bitcoin as a starting point, then the bitcoin treasury index has doubled over the same period compared to bitcoin.
And stock indices generally look like a horizontal axis.
And although MicroStrategy is obviously the main share in the index, it was the miners who showed the best results:
- mining company Hut 8 brought in 2 times more profit than Bitcoin in the same period;
- Marathon brought in 10 times more profit than Bitcoin in the same period.
Surely most of the profits came from Bitcoin's first parabolic price move, which slowly started in October last year.
But you can see that miners have their ownown life. Again, in the absence of a Bitcoin ETF in the US, I'm sure a lot of investors are trying to get as much indirect exposure from Bitcoin as possible.
Buying shares of mining companies is one of theways to do this, given that their profits (in USD) are highly dependent on the value of the bitcoin itself. But we will talk more about this sector another time.
More and more institutions are switching to bitcoin. Of course, the profile of early adopters is not very diverse, but this was to be expected.
If you see the glass half full, it only means that the demand is not yet satisfied. And judging by the attractiveness of stocks that are indirectly affected by bitcoin, I would say there is demand.
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