Listed Companies’ Bitcoin Holdings Reach $ 9.6 Billion As Institutional and Business Interest in Digital Assets Rises
According to an analysis conducted by London-based digital asset hedge fund manager Nickel Digital Asset Management, a staggering $ 60 billion worth of Bitcoin is held through various Bitcoin closed-end trusts and exchange traded products .
According to Nickel, these investment funds hold these allocations on behalf of their clients, including a range of retail investors, asset managers and, increasingly, institutional asset allocators.
Most of these funds are located in North America, with US and Canadian funds accounting for 75% of the above holdings.
Nickel’s analysis of data from https://bitcointreasuries.net/ on December 13, 2021 also revealed that 20 listed companies with a market capitalization greater than $ 1,000 billion invested approximately $ 9.6 billion in Bitcoin. According to his analysis, they initially spent $ 5.9 billion to buy the cryptocurrency.
North American companies also dominate listed companies’ investments in Bitcoin, with US and Canadian companies accounting for 13 of the 20, Nickel said. The list also includes companies based in the UK, Germany, Turkey, Liechtenstein, Hong Kong, Norway and Australia. Further analysis revealed that 19 listed companies bought Bitcoin, but they did not reveal all the details of their portfolio makeup.
Anatoly Crachilov, CEO and Founding Partner of Nickel Digital, said analysis of the performance of digital assets against traditional asset classes shows significant outperformance of digital assets over the medium to long term. âThis helps explain the growing interest in digital assets from businesses and institutional investors as part of their broader asset allocation. “
According to the Bank of England’s December 2021 Financial Stability Report, the market capitalization of crypto assets has increased tenfold since the start of 2020 to around $ 2.6 trillion as of November 24, 2021, which is roughly 1% of global financial assets.
As institutional investors and businesses increasingly become enticed by the prospect of higher returns from crypto assets, the Bank of England has said their volatility means investors could lose the entire value of their investment.
If their current rapid growth rate continues, the BoE’s financial policy committee says these assets will become more “interconnected” with the broader financial system, which could pose a number of financial stability risks.
âFor example, a significant growth in banks’ exposures to non-backed crypto assets would expose them to financial, operational and reputational risks,â the BoE writes in its Financial Stability Report. âWhile no major UK bank has yet reported direct exposure to crypto assets, some UK and global banks are starting to offer a variety of services, such as crypto asset derivatives trading and custodial services. “
Tensions in crypto asset markets could also spill over into broader financial markets, the BoE warns. “For example, if institutional investors embed crypto assets at the heart of their portfolios, a sharp drop in the valuations of crypto assets can cause investors to sell other financial assets and potentially transmit shocks through the financial system.”
The bank says the use of leverage can amplify this fallout further, if investors are forced to respond to margin calls on their crypto asset positions by selling other assets.
While surveys and market information suggest crypto assets currently represent only a small fraction of institutional investor portfolios at present, the BoE says they have the potential to grow rapidly. âThere is a need to focus more on improving the transparency of institutional investor assets as the crypto asset markets continue to grow,â he said.