Factors Driving Corporate Bitcoin Adoption

Bitcoin has become increasingly appealing to investors looking for an asset to hedge against inflation. Given BTC’s self-limiting supply, it is not subject to the type of depreciation that can impact fiat currencies. 

“Companies‬‭ understand‬‭ that‬‭ monetary‬‭ inflation‬‭ is‬‭ the‬‭ core‬‭ reason‬‭ behind‬‭ the‬‭ decline‬‭ of‬‭ their‬‭ balance‬‭ sheet’s‬‭ purchasing‬‭ power‬‭ parity,” Shannon told BeInCrypto.

According to him, this may have led Metaplanet to accumulate record amounts of Bitcoin during the first three months of 2025. Metaplanet has already announced plans to amass 10,000 BTC by the end of the year.

“For‬‭ Japanese‬‭ firms‬‭ facing‬‭ persistent‬‭ yen‬‭ depreciation,‬‭ Bitcoin‬‭ serves‬‭ as‬‭ a‬‭ hard-asset‬‭ hedge.‬‭ Moreover,‬‭ in‬‭ markets‬‭ with‬‭ negative‬‭ real‬‭ yields,‬‭ BTC‬‭ offers‬‭ superior‬‭ long-term‬‭ risk-adjusted‬‭ returns.‬‭ Although‬‭ It‬‭ has‬‭ no‬‭ yield‬‭ it‬‭ offers‬‭ long-term‬‭ upside‬‭ and‬‭ inflation‬‭ resistance‬‭ when‬‭ the‬‭ inflation rates‬‭ (either‬‭ prices‬‭ paid or monetary inflation) are higher than the nominal interest rate,” he said. 

Given heightened concerns over spikes in inflation in the United States, Bitcoin has also become more appealing among American investors. Changes in accounting for digital currencies have also made them a more attractive addition to investment portfolios.

The Appeal of New Accounting Standards

In addition to its perceived value as an inflation hedge, Bitcoin’s attractiveness as a corporate investment has been further amplified by recent modifications to accounting standards in the United States.

In January, the Financial‬‭ Accounting‬‭ Standards‬‭ Board‬‭ (FASB) issued a new rule that enabled companies‬‭ with‬‭ BTC‬‭ in‬‭ their‬‭ treasuries‬‭‬‭ to‬‭ report‬‭ the‬‭ profits‬‭ on‬‭ unrealized‬‭ gains‬‭ from‬‭ their‬‭ digital‬‭ assets. Instead of waiting until they have sold their assets, companies can now report that increase in value as income in their financial statements. 

“‭Selling‬‭ a‬‭ depreciating‬‭ fiat‬‭ currency‬‭ in‬‭ return‬‭ for‬‭ a‬‭ digital‬‭ hard‬‭ asset‬‭ such‬‭ as‬‭ Bitcoin‬‭ that‬‭ is‬‭ also‬‭ liquid‬‭ and‬‭ a‬‭ ‘cash‬‭ equivalent’‬‭ that‬‭ can‬‭ benefit‬‭ from‬‭ the‬‭ new‬‭ FASB‬‭ accounting‬‭ treatment‬‭ (which‬‭ can‬‭ also‬‭ improve‬‭ the‬‭ income‬‭ statement)‬‭ makes‬‭ Bitcoin‬‭ an‬‭ attractive‬‭ treasury asset,” Shannon added. 

Despite its potential for inflation stability, Bitcoin’s inherent volatility can also attract investors with a greater risk appetite and companies aiming to diversify their holdings.

Can Bitcoin’s Volatility Be a Strategic Advantage?

Beta measures a stock’s volatility relative to the overall market. The higher the beta, the more volatile the stock is.

According to Shannon, adding a volatile asset like Bitcoin to the balance sheet increases the beta of the equity. If the price of Bitcoin goes up, the overall investor portfolio can score big. 

“This‬‭ can‬‭ enhance‬‭ returns‬‭ for‬‭ investors‬‭ and‬‭ has‬‭ proven‬‭ to‬‭ do‬‭ so.‬‭ The‬‭ volatility‬‭ of‬‭ the‬‭ equity‬‭ also‬‭ tends‬‭ to‬‭ increase‬‭ which‬‭ improves‬‭ the‬‭ interest‬‭ rate‬‭ on‬‭ convertible‬‭ debt,‬‭ therefore,‬‭ impacting‬‭ the‬‭ capital‬‭ structure‬‭ and‬‭ cost‬‭ of‬‭ capital‬‭ for‬‭ the‬‭ company.‬‭ The‬‭ volatility‬‭ also‬‭ gives‬‭ way‬‭ for‬‭ option‬‭ and‬‭ derivative‬‭ traders‬‭ which‬‭ can‬‭ increase‬‭ the‬‭ volumes‬‭ of the stock and make it a more liquid asset,” Shannon told BeInCrypto.

However, investors can face higher potential losses during a Bitcoin bear market. Because of this, BTC as a treasury asset may be more appealing to companies looking to diversify or firms large enough to weather the storm.

Bitcoin for Specific Business Cases

The volatility and heightened trading activity accompanying Bitcoin adoption might offer a strategic advantage to particular companies, notably those with performance issues or in highly competitive sectors.

“Underperforming‬‭ or‬‭ mature‬‭ businesses‬‭ in‬‭ competitive‬‭ markets‬‭ would‬‭ benefit‬‭ from‬‭ an‬‭ asset‬‭ that‬‭ increases‬‭ the‬‭ volatilty‬‭ and‬‭ volumes,‬‭ as‬‭ well‬‭ as‬‭ the‬‭ beta‬‭ of‬‭ the‬‭ equity,” Shannon told BeInCrypto.

GameStop is a good example of the former. The retailer’s Q4 2024 earnings report showed a significant decline in its sales volume. 

Despite the worrying financial report, GameStop’s stock value rose by 12% after signaling that it would add BTC as a treasury reserve asset. Limited crypto exposure is expected to strengthen the company’s financial position in 2025.

In turn, Tether’s perceived robustness could make it more capable of withstanding Bitcoin’s significant price volatility.

Leveraging Profits for Bitcoin: Tether’s Financial Strategy

As the issuer of the largest stablecoin, Tether generates substantial revenue from transaction fees and managing its vast reserves. This financial strength could provide a buffer to absorb potential losses from Bitcoin price drops.

Demonstrating this financial capacity, Tether allocates 15% of its quarterly net profits to Bitcoin.

“This‬‭ is‬‭ similar‬‭ to‬‭ Dollar‬‭ Cost‬‭ Averaging‬‭ by‬‭ allocating‬‭ 15%‬‭ of‬‭ its‬‭ net‬‭ realized‬‭ operating‬‭ profits‬‭ for‬‭ Bitcoin.‬‭ This‬‭ is‬‭ a‬‭ relatively‬‭ conservative‬‭ approach‬‭ because‬‭ it‬‭ is‬‭ post-tax‬‭ so‬‭ the‬‭ excess‬‭ cash‬‭ (retained‬‭ earnings)‬‭ that‬‭ accrues‬‭ to‬‭ equity‬‭ can‬‭ be‬‭ used‬‭ for‬‭ a‬‭ higher‬‭ growth‬‭ asset.‬‭ In‬‭ this‬‭ instance,‬‭ there‬‭ are‬‭ not‬‭ huge‬‭ drawbacks‬‭ because‬‭ the‬‭ company‬‭ is‬‭ well‬‭ capitalised‬‭ with‬‭ $7 billion‬‭ in‬‭ net‬‭ equity,‬‭ so‬‭ its‬‭ prudent‬‭ risk‬‭ management.‬‭ However,‬‭ there‬‭ are‬‭ still‬‭ black‬‭ swans‬‭ where‬‭ cash‬‭ would‬‭ be‬‭ better needed than Bitcoin,” Shannon explained.

Despite its inherent unpredictability, Bitcoin’s observed long-term decline in volatility over recent years has supported the rationale for including it –even in small amounts– within a well-diversified portfolio.

“Bitcoin‬‭ has‬‭ improved‬‭ the‬‭ risk-adjusted‬‭ returns‬‭ of‬‭ the‬‭ 60/40‬‭ portfolio‬‭ since‬‭ 2017.‬‭ [It] still‬‭ has‬‭ volatility‬‭ risk‬‭ which‬‭ companies‬‭ may‬‭ not‬‭ be‬‭ willing‬‭ to‬‭ absorb,‬‭ however,‬‭ the‬‭ volatility has historically trended down and could continue this into the future,” Shannon added.

While acknowledging Bitcoin’s advantages, Shannon finds it increasingly challenging to foresee if corporate asset accumulation will maintain the same rapid pace in Q2 as it did at the beginning of the year.

Market Disruptions: Will Corporate Appetite Wane?

Though only in its second week, April has proven to be a hard month for financial markets. The cryptocurrency sector experienced the most pronounced impact.

Trump’s recent Liberation Day celebration sent stocks on a downward spiral as investors braced themselves for incoming uncertainty. During the two days that followed Trump’s tariff announcements, over $1 billion in long and short positions were wiped out by the weekend volatility.

Amid this new wave of anxiety, Shannon anticipates that companies will prioritize more pressing concerns over further Bitcoin accumulation.

“The‬‭ longer-term‬‭ trend‬‭ points‬‭ to‬‭ further‬‭ balance‬‭ sheet‬‭ accumulation,‬‭ however,‬‭ its‬‭ hard‬‭ to‬‭ call‬‭ quarter‬‭ over‬‭ quarter.‬‭ Based‬‭ on‬‭ the‬‭ current‬‭ volality‬‭ of‬‭ the‬‭ markets,‬‭ and‬‭ tariff‬‭ implications‬‭ on‬‭ margins,‬‭ I‬‭ suspect‬‭ operational‬‭ issues‬‭ will‬‭ be‬‭ front‬‭ of‬‭ mind‬‭ rather than Bitcoin accumulation,” he said.

Even after this initial wave of uncertainty subsides, macroeconomic conditions will significantly determine future corporate Bitcoin acquisitions. Bitcoin will also need to remain competitive to incentivize these purchases.

“A‬‭ higher‬‭ Bitcoin‬‭ price‬‭ should‬‭ lead‬‭ to‬‭ FOMO‬‭ and‬‭ outperformance‬‭ of‬‭ Bitcoin-backed‬‭ companies.‬‭ For‬‭ this‬‭ to‬‭ occur,‬‭ trade‬‭ policy‬‭ certainty‬‭ is‬‭ needed‬‭ (or‬‭ in‬‭ fact‬‭ a‬‭ reversal‬‭ via‬‭ deals‬‭ with‬‭ trading‬‭ partners)‬‭ as‬‭ well‬‭ as‬‭ a‬‭ lower‬‭ 10‬‭ year‬‭ yield‬‭ and either a consolidation or recovery of the equity markets,” Shannon added.

For now, external headwinds may outweigh Bitcoin accumulation strategies.

An Uncertain Future

Corporate Bitcoin accumulation has reached new heights during the first quarter of 2025, but recent political and economic developments may stump future advancements. 

Until the future of US trade policy and international reactions becomes more certain, the cryptocurrency market will likely experience heightened volatility. These circumstances might lead traditional investors and companies to favor a conservative strategy, directing their resources toward other priorities.

Only the passage of time will determine the outcome.