Abra CEO Bill Barhydt revealed that midcap companies and nonprofit organizations are increasingly converting their treasuries to Bitcoin (BTC). This trend follows the successful strategy employed by MicroStrategy (MSTR), which has seen its stock appreciate due to its substantial Bitcoin holdings.
Midcap & Nonprofit Firms Tap Into MicroStrategy Bitcoin Tactics
“We’re seeing kind of post what’s happened with MicroStrategy, a whole bunch of particularly midcap companies, even nonprofits, come to us and say, ‘Hey look, we saw your announcement about your new registered investment advisor separately managed accounts,’” Barhydt explained. “They love that model for holding crypto,” he added, according to a CNBC interview.
One of the driving factors behind this shift is the perception of cash as a depreciating asset. Traditionally, markets discount cash reserves to zero on balance sheets. Hence, by replacing cash with Bitcoin, an appreciating asset, companies are seeing a positive impact on their stock values.
Barhydt emphasized, “I’ve seen the stock appreciation for MicroStrategy because they’ve effectively put Bitcoin on their balance sheet. Markets traditionally discount cash on your balance sheet to zero right because it’s a depreciating asset. But if you replace that with an appreciating asset, now all of a sudden they don’t get discounted to zero; it gets a bump and a bonus for being on your balance sheet.”
Barhydt disclosed that several midcap public companies have already experienced significant increases in their stock value by adopting this strategy. “We’ve seen several midcap public companies’ stock get a huge bump overnight – 20, 30, 40% by replacing the cash with Bitcoin,” he said.
Interestingly, nonprofits are also joining this trend. According to Barhydt, some nonprofits are converting their treasuries into Bitcoin with the intention of holding it long-term and leveraging its value to fund operations. He said, “We’ve even seen nonprofits now that have started to convert treasury into Bitcoin. Abra CEO also highlighted that these organizations “intend to hold that forever if they can.”
Also Read: Hong Kong & Australia Bitcoin ETF Inflows Hit Record High
Future Outlook On BTC Adoption
Barhydt also highlighted that these NPOs can “actually borrow against the Bitcoin so they can fund their operations by borrowing a depreciating asset against the value of an appreciating asset.” Meanwhile, Spot Bitcoin ETFs have been witnessing significant institutional influx. This underscores BTC’s adoption as a mainstream asset.
The revelation also emphasizes the importance of innovative financial models, such as the separately managed accounts offered by Abra. These accounts allow companies to retain title to their assets. This avoids the risks associated with placing assets on another entity’s balance sheet.
The implications of this shift are far-reaching. Barhydt predicts that many midcap firms and nonprofits with substantial dollar reserves will convert these into BTC. Moreover, he expects the stocks of these companies to mirror MicroStrategy stock action after the Bitcoin acquisition.
Abra CEO stated, “I foresee a lot of midcaps, nonprofits doing this. You’re going to see significant increases in their stock value. For those companies that have nine, maybe low 10 figures of dollars in their treasury that’s effectively being discounted either to zero or significantly is now going to see a significant increase in its value because they’re going to convert it to Bitcoin.”
Also Read: Samson Mow Proposes 50K Bitcoin Buyback To German Lawmaker
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Crypto Analyst Says Mid-Cap Memecoin Primed To ‘Absolutely Rip,’ Updates Outlook on BNB and Dogecoin The Daily Hodl
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The analyst who called this year’s Bitcoin (BTC) collapse is predicting more corrections for Cardano (ADA) and mid-cap altcoin Cronos (CRO).
Pseudonymous analyst Capo tells his 438,400 Twitter followers that Cardano’s support around $0.44 is about to cave in after six touches in less than two months.
“Sixth touch of support. Getting weaker and weaker. Next support: $0.29-$0.31.”
At time of writing, Cardano is changing hands for $0.43, below Capo’s support level and down nearly 6% in the last 24 hours.
Another altcoin on the trader’s list is Cronos, the cryptocurrency that powers the Crypto.com payment, trading and financial services platform. According to Capo, CRO has broken down from its horizontal and diagonal support levels and looks poised to start the next leg down.
“CRO update: $0.055-$0.065.”
At a current price of $0.11, a move to Capo’s target suggests a downside potential of nearly 50% for Cronos.
The crypto strategist is also issuing a general warning to crypto market participants, positing that fresh inflation data could drive digital assets to new 2022 lows.
“All the charts show weakness. New lows are just a matter of time. CPI [consumer price index] this week.”
New CPI data is scheduled for release on June 13th. Traders keep a close watch on the CPI as high inflation numbers could signal that the Federal Reserve might introduce a fresh round of interest rate hikes which often does not bode well for risk-on assets like cryptocurrencies.
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Featured Image: Shutterstock/nemovljatko
Bitcoin kicked off this week on the red, and the rest of the crypto market followed. In the top 10 cryptocurrencies by market cap, BTC and Ethereum are amongst the most resilient for the weekly chart.
In that time, the market has been hit by a succession of “buy the rumor, sell the news” events, and one major macro factor with the potential default of Chinese real state giant, Evergrande. Thus, the levels of uncertainty have been on the rise.
Related Reading | Did Bitcoin Really Experience A Flash Crash Down To $5,400?
In the middle of this storm impacting Bitcoin and other major cryptocurrencies, there is a select group that has managed to stay in the green. According to a recent report by Arcane Research, the assets that comprised their middle-cap altcoins index recorded some profits as the bearish trend unfolded.
For the 30 days chart, the Mid Cap Index comprised of cryptocurrencies such as Tezos, Algorand, and Avalanche showed small profits. These tokens have seen a massive rally during Q3, 2021, and were amongst the biggest losers during this week’s bearish trend, but they are still up 5% in the monthly chart, as seen below.
In opposition, Bitcoin records a 9% loss in the 30-day chart with similar losses for Ethereum, Cardano, Solana, Binance Coin, and other major cryptocurrencies. Smaller assets experienced the highest losses for this period with a 14% loss by September 21. Arcane Research noted:
As often happens during market turmoil, the Bitcoin dominance increases, as altcoins often act as high beta play on the crypto sector. The last week, bitcoin’s market share increased by 1.14% grabbing market share from the other big coins like ETH, ADA, and SOL.
Bitcoin Reacts To Macro Factors, What’s Next?
In a separate report, investment firm QCP Capital analyzed the bigger picture for Bitcoin and the crypto market. Although mid-caps preserved part of their gains in higher timeframes, they will most likely follow BTC’s price trajectory in the short term despite their fundamentals.
Related Reading | Bitcoin Holders Take Profits As Price Falls, Indicators Remain Bullish?
The first cryptocurrency by market cap faces September, a month that has historically been bearish for the asset, and potential complications from regulators in the U.S. and the performance on the Asia markets due to Evergrande.
As QCP Capital noted, tomorrow September 22, will be crucial to determine the trend in the short term. Bitcoin must hold the $40,200 support in case of more downside pressure when the market re-open after a long weekend.
Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course
The firm expect some government intervention to rescue the real estate company. This could result in the best-case scenario for Bitcoin and the crypto market, but there is a lot of fear and uncertainty about China’s approach. QCP Capital said:
(…) the lack of guidance so far from Chinese regulators is scaring the market. The fear here is that President Xi could allow. Evergrande to fail as an example to the other real estate players ahead of the 100th anniversary of Chinese Communist Party (CCP) in 2022. He has already taken draconian steps with Big Tech and Education. At this point, the market has already priced in Evergrande’s equity as worthless (…).
At the time of writing, Bitcoin trades at $42,814 with a 2.6% loss in the daily chart.
Data shows mid-cap altcoins have crushed Bitcoin and Ethereum in the month of August as their returns reach almost 60%.
Mid-Cap Altcoin Index Ahead of Bitcoin And Ethereum
As per the latest report from Arcane Research, the cryptocurrency market has seen a great month overall as indexes retain most of their gains till the monthly close.
The great month is despite the boring last week where many coins have produced flat numbers. Bitcoin, however, has been fairly quiet in the month, and altcoins have surely taken advantage of the fact.
Here is a table that shows the weekly percentage change of the total market capitalization of the major cryptocurrencies:
The total market capitalization of the various cryptos | Source: The Arcane Research Weekly Update - Week 34
As the table shows, not only Bitcoin (down 0.26%) and Ethereum (up 0.29%), but most of the crypto market published similar low percentage changes in the last week of August.
Related Reading | Stablecoins Reserve Hits A New ATH, What Does It Mean For Bitcoin’s Price?
Now, here is a chart that reveals how the market capitalization of various indexes has changed in the past month:
Mid-cap altcoins seem to be leading in monthly performance | Source: The Arcane Research Weekly Update - Week 34
On examining the graph, it becomes apparent that mid-cap cryptocurrencies started August strong, and surpassed all other indexes by the middle of the month. These coins came out first in the market as their returns finished at about 59% at the monthly close.
Related Reading | Quant Explains Why Bitcoin Bull Cycle Is Only In Phase 1
The large-cap altcoins are up 33% while the small-cap cryptos are up around 36%. Therefore, the mid-cap index is almost double the second highest in the chart.
Bitcoin’s returns are about 17% as the crypto continues its recovery that started in the last week of July.
BTC And ETH Prices
At the time of writing, Bitcoin’s price floats around $47.5k, down 2% in the last 7 days. Over the past month, the cryptocurrency has gained 19%.
The below chart shows the trends in the price of the coin over the past three months:
BTC's price continues to go down | Source: BTCUSD on TradingView
Bitcoin’s downtrend looks worrying as its trading volume has also dipped in the past week. It’s unclear when the trend might change, but if the coin has to retest $50k, some trading activity will be needed.
At the same time, Ethereum’s price is around $3.5k. The coin is up 11% in the last 7 days, and its monthly gains are about 35%.
Here is a chart for ETH’s price over the past three months:
ETH shoots straight up | Source: ETHUSD on TradingView
Ethereum on the other hand looks to be quite bullish as the crypto has started on a sharp uptrend. Though, it remains to be seen how long the coin can retain the momentum.
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