Corporates raise money from capital markets and use that money to buy cryptos. Their share prices raise, and that makes them repeat the whole exercise. MicroStrategy, a software company, owns Bitcoin worth $64.8 billion. Companies vie with each other to build their own crypto stash. It seems there is a race to build crypto corporate treasury.
A coffee company whose shares had fallen 90 per cent in 2024 have doubled in value since it went in for a crypto buy in May. It holds 69 Bitcoin, and wants to add thousands more.
Most corporate treasurers are risk averse. They would not buy volatile tokens. They too are lured by crypto wave. There is investor demand for exposure to crypto vehicles, it makes sense for more players to hop aboard the bandwagon and offer supply to match.
There are risks. A crypto sell off could turn into a crash. These are overpriced tokens held by the weak and indebted companies. It could create a wave of forced selling. It should be remembered that in the last crash, Bitcoin fell more than 50 per cent.
Are we using the Bitcoin innovation which is blockchain based prudently? Or is it speculative frenzy to make ‘money from money’?
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