In recent developments, corporate Bitcoin treasuries have collectively faced a steep decline in value, shedding more than $4 billion following the tariffs imposed by the U.S. government. As of early April 2024, the total value of corporate Bitcoin holdings stands at approximately $54.5 billion, down from around $59 billion prior to the tariff announcement on April 2.
The Tariff Impact
President Donald Trump’s tariffs have not only triggered a global market sell-off but have also placed significant pressure on publicly traded firms holding Bitcoin. The Bitwise Bitcoin Standard Corporations ETF (OWNB), which tracks a diverse basket of corporations invested in Bitcoin, has seen its shares plummet by over 13% since the announcement. Similarly, firms like Strategy, a Bitcoin hedge fund led by Michael Saylor known for pioneering corporate Bitcoin acquisitions, reported share losses exceeding 13% in the same timeframe.
These losses highlight the ongoing skepticism surrounding Bitcoin’s viability as a treasury asset. Traditionally, corporate treasuries invest in low-risk assets such as U.S. Treasury Bills, leaving many to question the wisdom of diversifying with highly volatile cryptocurrencies. David Krause, a finance professor at Marquette University, articulated these concerns by stating that “cryptocurrencies’ high volatility and uncertain regulatory landscape are misaligned with the fundamental goals of treasury management, including stability, liquidity, and capital preservation.”
The Case for Bitcoin in Corporate Treasuries
Despite these challenges, there remains a debate about the role of Bitcoin within corporate finance strategies. For instance, in 2024, soaring Bitcoin prices contributed to an astounding 350% increase in the shares of Strategy, attracting a host of imitators. However, investor sentiment appears to have soured, particularly in light of GameStop’s recent struggles, where the company suffered a $3 billion loss in market capitalization as shareholders questioned its Bitcoin acquisition strategy.
Yet Fidelity Digital Assets proposed a counterargument, suggesting that incorporating Bitcoin into corporate treasuries could serve as a hedge against rising fiscal deficits, currency devaluation, and geopolitical risks. Their 2024 report reflects this potential value, and it seems that this thesis is gaining traction as Bitcoin demonstrates signs of resilience amidst the turmoil triggered by tariffs.
Resilience Amidst Market Uncertainty
Interestingly, Bitcoin has maintained its ground or rebounded on days when traditional risk assets faltered, indicating a unique positioning in today’s volatile market. Investors are now closely monitoring Bitcoin’s performance to determine its appeal as a non-sovereign, permissionless asset in an increasingly protectionist global economy.
As the landscape evolves, firms and investors alike are tasked with navigating the uncertain waters of cryptocurrency adoption, particularly in treasury management roles. The ongoing discussions surrounding the place of Bitcoin in corporate finance will likely continue as more evidence unfurls in favor of or against its inclusion in corporate strategies.
