First, Tesla’s Q1 earnings release revealed that the company sold $272 million worth of its bitcoin holdings in the first quarter.
Authored by CoinDesk’s head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week – with insights and analysis – from a professional investor’s point of view.
Since corporate treasury’s priority is ensuring the business has the funds it needs for operations and strategic investment, today as well as in the future, some advocates argue that bitcoin is an ideal treasury asset, even though the volatility is a concern.
Software company MicroStrategy kicked this off last August by putting all of its corporate treasury into bitcoin; the firm has continually added to its holdings, even raising capital to do so.
After a public back-and-forth on Twitter between CEO Elon Musk and MicroStrategy CEO Michael Saylor, expectations rose that Tesla would soon join the ranks.
Another thing entirely is liquidity on the way out; any corporate treasurer will need to feel comfortable that it can convert reserve assets into working capital at a moment’s notice.
Companies don’t have to go that far – with even a modest allocation to bitcoin, they can maintain their core business but put in place a potential buffer when earnings look weak.
Going forward, it’s likely to be powered by a growing understanding of the efficiency of bitcoin as collateral, and the increasing amount of bitcoin ready to be used as collateral.
With inflation running persistently below the target average of 2%, Powell acknowledged that inflation will be allowed to run above that level for some time.
So the prospect of inflation running above 2% for several years is likely to send corporate treasurers scurrying to find ways to protect assets from what MicroStrategy CEO Michael Saylor calls the “melting ice cube” effect.
And, as my colleague Brady Dale reported this week, the total market capitalization of decentralized finance tokens, which represent lending and other financial applications, has broken through $120 billion to reach an all-time high.
But all of this could end up being dwarfed by the use of bitcoin as a collateral asset in bilateral repo transactions.
But for overnight lending to corporations with operations in many different currencies, bitcoin could start to be seen as an intriguing collateral alternative, one that also has the potential to boost earnings when necessary.
And regulators could find the transparency of blockchain-based collateral to be a refreshing change from the opaque and convoluted webs of ownership endemic to the market today.
Crypto assets do bring a different type of risk to a fragile equation, however, and the concept of bitcoin as collateral has many hurdles to overcome before it can make a meaningful difference in today’s financial ecosystem.
Much was made of the “about-turn” this implies, since JPMorgan CEO Jamie Dimon in the past has called bitcoin “stupid” and has threatened to fire any trader caught dabbling in crypto markets.
Trying to beat the market with such a volatile asset is a risky strategy, not just for the investors but also for the firm’s reputation.
The main takeaway here, however, is that a large bank like JPMorgan would not make a decision to spin up a product like this without serious consideration, especially in light of Dimon’s previous comments.
Pretty soon the list of traditional banks not involved in crypto will be shorter than the list of those that are.
Bank, it participated along with State Street and other investors in a $30 million funding round for institutional cryptocurrency infrastructure firm Securrency.
Exchanges and services sprang up ad hoc over the past 10 years, with no coordination, so there is no industrywide technology standard for connectivity.
The SEC only has three of the ten active proposals in front of it for review, and it could choose to approve more than one at the same time, to avoid granting first mover advantage and to give the market more choice.
A bill approved by Germany’s parliament last week, expected to take effect on July 1 if approved by the Bundesrat, will allow wealth and institutional investment fund managers known as Spezialfonds to invest up to 20% of their portfolio in crypto.
Under the plan, which he intends to present during a speech on Wednesday to a joint session of Congress, the tax rate on profits from the sale of an asset such as property or a stock would go from 20% to 39.6% for those with income over $1 million a year.
In a three-part series, “Mastering Your Money,” MarketWatch editors and reporters speak with panelists to help people get a handle on their finances.
The billionaire investor explained that the carriers might have had a harder time getting help if Berkshire had been a significant shareholder.“They might have very well had a very, very, very, very different result if they had a very, very, very rich shareholder that owned 8 or 9%,” Buffett said.Buffett’s been criticized in recent years for his ever-growing cash pile that hit a near record $145.4 billion at the end of the first quarter.
Warren Buffett on Saturday defended Berkshire Hathaway Inc.’s decision last year to sell its stake in major airlines in May 2020 as the industry reeled from the pandemic and share prices were near what would prove to be their bottom..