Corporate Treasuries Outpace ETFs in Bitcoin Purchases
Corporate treasuries have outstripped exchange-traded funds (ETFs) in bitcoin acquisitions for the third quarter in a row, as an increasing number of businesses aim to leverage strategies similar to those utilized by MicroStrategy in a more favorable regulatory landscape for cryptocurrencies. In the second quarter, publicly traded companies purchased approximately 131,000 bitcoins, marking an 18% increase in their total bitcoin holdings, according to data from Bitcoin Treasuries. In contrast, ETFs saw a more modest 8% rise, acquiring around 111,000 BTC during the same timeframe.
Distinct Motivations for Institutional Investors
According to Nick Marie, head of research at Ecoinometrics, the motivations for institutional investors engaging with bitcoin through ETFs differ significantly from those of public companies. The latter are focused on accumulating bitcoin to enhance shareholder value, rather than speculating on price fluctuations. Marie noted that while public companies increased their bitcoin holdings by 4% in April—during a challenging period marked by market volatility—ETFs only managed a 2% growth. He emphasized that public companies are less concerned with current market conditions and more focused on expanding their bitcoin reserves to appeal to potential investors.
Bitcoin ETFs Remain the Largest Holders
Despite the recent trend favoring corporate treasuries, bitcoin ETFs remain the largest holders of the cryptocurrency, with over 1.4 million coins, which constitutes approximately 6.8% of the total fixed supply of 21 million bitcoins. In comparison, public companies collectively hold around 855,000 coins, accounting for about 4% of the total supply.
Regulatory Environment and New Entrants
The growing interest from public companies is indicative of the regulatory relief that the cryptocurrency sector has experienced under the Trump administration. In March, an executive order was signed to establish a U.S. bitcoin reserve, reinforcing the legitimacy of bitcoin, which has historically been viewed as a risky asset by many investors. The last time ETFs led public companies in bitcoin purchases was in the third quarter of 2024, prior to Trump’s re-election.
Recent Corporate Moves into Bitcoin
During the second quarter, notable corporate developments included GameStop’s decision to invest in bitcoin after its board approved it as a reserve asset, the merger of health-care firm KindlyMD with bitcoin investment company Nakamoto, and investor Anthony Pompliano’s ProCap initiating a bitcoin buying program while preparing to go public via a special purpose acquisition company (SPAC). MicroStrategy, which recently rebranded to just “Strategy,” continues to dominate the bitcoin treasury landscape, holding around 597,000 BTC, followed closely by bitcoin mining company Mara Holdings, which owns nearly 50,000 coins.
Challenges in Competing with MicroStrategy
Ben Werkman, chief investment officer at Swan Bitcoin, remarked on the challenges faced by other entities in trying to match MicroStrategy’s scale. He noted that the company is likely to remain a preferred destination for institutional investment due to its substantial liquidity. Conversely, smaller firms may attract retail investors seeking higher returns from the initial growth potential associated with bitcoin treasury strategies, especially for those who missed earlier opportunities with MicroStrategy.
Future of Bitcoin Treasury Strategies
Marie speculated that a decade from now, fewer companies may be committed to the bitcoin treasury strategy, as the influx of new participants could dilute the effort across firms. Furthermore, bitcoin may become so mainstream that companies will no longer face restrictions on direct exposure to it. He described this trend as a wave of companies attempting to exploit arbitrage opportunities within the market.
Investor Preferences for Bitcoin Treasury Companies
Werkman highlighted that many investors currently drawn to companies adopting bitcoin treasury strategies already have a foundational belief in bitcoin. For these investors, equities tied to leveraged bitcoin could serve as a means to outperform direct bitcoin investments. He pointed out that a unique appeal of these companies lies in their ability to accumulate more bitcoin on behalf of their investors, given their access to capital markets and ability to issue securities.
Potential for Transition to Bitcoin Holdings
Additionally, Werkman mentioned that a significant number of companies might convert their existing treasury assets into bitcoin without employing the leverage strategies typical of firms like MicroStrategy. He emphasized the potential for these companies to enhance shareholder value through their bitcoin-backed operations, creating a compelling value proposition for investors.
