Bitcoin [BTC] as a treasury reserve asset is still a bold, unproven move

Bitcoin [BTC] as a treasury reserve asset is still a bold, unproven move, but more companies are jumping on board. The idea? BTC hedges against inflation and adds diversification to corporate balance sheets.

Bitcoin [BTC] as a treasury reserve asset is still a bold, unproven move, but more companies are jumping on board. The idea? BTC hedges against inflation and adds diversification to corporate balance sheets, much like how Nvidia is a key holding in many portfolios.

But with the S&P 500 closing Q1 with a $2 trillion decrease in market value, inflation ticking up to 2.8%, and a 25% tariff on the auto industry being announced, there’s plenty of macro heat on the market.

Even Tesla couldn’t escape the weaker-than-expected Q1 performance, a stark contrast to last year’s stellar performance.

With all this uncertainty, it’s no surprise that Bitcoin’s growing role in corporate balance sheets is making headlines. However, there’s another big reason for the buzz.

Back in 2020, MicroStrategy (MSTR) famously bet on BTC as its primary treasury asset, a decision that has since been scrutinized by financial analysts and market researchers.

Since then, while the S&P 500 has seen a 64.81% increase and BTC has surged by 781.13%, MSTR’s valuation has skyrocketed by a whopping 2,074.85%.

With over 500,000 BTC in its treasury, it’s no wonder S&P 500 companies are keeping an eye on MSTR’s performance.

Source: BitBo

As the chart above shows, MSTR’s stock price tells a striking tale. In Q4 2024, Bitcoin crossed the $100k mark, subsequently pushing MSTR past $500 for the first time in its history. Fast forward a few months, and the stock has plummeted by 45%, now trading at $277.

As Bitcoin continues to be battered by macro volatility and gold hits record highs, the question remains – is adding BTC to the S&P 500 balance sheet a smart treasury move or simply a high-risk gamble?

Recently, GameStop (GME) announced a $1.3 billion plan to adopt BTC as a treasury reserve asset. However, the market didn’t react favorably, causing GME stock to drop by 20%.

Why the negative response? As AMBCrypto highlighted, BTC holds great potential in the long term, but its short-term volatility poses a significant risk, especially in a market already grappling with inflation and a potential recession.

When Bitcoin experiences a downturn, companies holding it take an even bigger hit due to the size of their investments. For instance, in 2022, Cathie Wood’s ARK Invest fund saw huge losses due to its massive BTC holdings.

For the skeptics out there, if companies don’t include gold in their treasury assets, why would they hold BTC? After all, gold remains the go-to safe haven asset during turbulent market periods.

The logic is clear – gold just touched $3,100, a record high, while Bitcoin slipped to $77k. The numbers speak for themselves.

Source: TradingView (XAU/USD)

Nevertheless, with 90 S&P 500 companies already holding BTC, some industry figures like TechCrunch founder Paul Tech predicts that by 2030, 25% of S&P 500 companies will have BTC on their balance sheets.

But with Bitcoin’s price movements, it’s a high-stakes move that could either pay off big time or turn into a career risk for these executives.