Corporations Accumulate 3.7% of Bitcoin Supply, Driving Price Stability

Corporations are increasingly adopting Bitcoin as a treasury asset, following the lead of Strategy, which has been accumulating Bitcoin for several years. This trend is evident as more companies, such as 21 Capital, Nakamoto, and ProCapBTC, are entering the space, with ProCapBTC reportedly raising $750 million in equity and convertible debt to accumulate Bitcoin.

Currently, 216 entities, including 101 public companies, hold nearly 31% of the circulating Bitcoin supply, with corporate treasuries alone accounting for approximately 765,300 bitcoins, or 3.7% of the total supply. This trend shows no signs of slowing down, with existing firms continuing to accumulate and new players entering the market.

The growing adoption of Bitcoin by sovereign and regulated financial institutions has led to decreased volatility in all time frames after 2018. The launch of Bitcoin ETFs in 2024 further strengthened this trend, resulting in a more stable Bitcoin price that rises steadily without the frequent high-amplitude fluctuations of the past.

However, the actual impact of these treasuries on Bitcoin's price is increasingly unclear. While announcements of new treasuries are met with bullish fanfare, the price of Bitcoin continues to fall despite seemingly positive developments. This is partly due to the fact that Bitcoin treasuries not only buy but also sell Bitcoin to repurchase shares, and the full amount of the deal is often raised slowly over several months.

Moreover, the relentless accumulation of Bitcoin by corporates and ETFs is pulling coins away from circulation, making a notable part of the supply dormant and somewhat purposeless for years. This drives Bitcoin away from its initial role as an alternative electronic cash, and some in the crypto community raise critical voices directed at Bitcoin treasuries.

Many Bitcoin enthusiasts prefer to own their bitcoins and do not outsource the hassle to corporations. Some criticize Bitcoin treasuries for not representing the spirit of Bitcoin, while others emphasize the troubled past of Bitcoin treasury frontmen. For instance, MicroStrategy had a questionable episode during the dot-com bubble era, resulting in losses for investors and an SEC accusation of fraud.

For some, Pompliano is an ambiguous candidate for helming the new mighty Bitcoin treasury. While Pompliano is a well-known and recognizable Bitcoin advocate, some remember his involvement in promoting fraudster crypto exchange FTX and its associated platform, BlockFi. The collapses of these platforms were painful not only for its users but also impacted the entire crypto sector, crashing the market and infusing cryptocurrency distrust among the community outsiders and, more importantly, regulators.

Despite these criticisms, Bitcoin treasuries have their benefits. Adam Back, a Blockstream CEO and the only person whose work is referenced in the Bitcoin whitepaper, explained that Bitcoin treasuries “are bringing forward the Bitcoin adoption curve.” He pointed out that most people don’t have money and opportunities to acquire Bitcoin, while public companies have these opportunities to raise capital by selling their shares or vice versa.

These companies don’t need free money to invest in Bitcoin as they can buy Bitcoin in advance and pay for it years later. “They are basically an arbitrage between the fiat [monetary system] and the hyper-bitcoinized future.” A more mainstream explanation is that shares and ETFs are easier to deal with for institutional investors than Bitcoin. So they don’t have to worry about the Bitcoin legal status and lack of the company around it. Instead, they can deal with a public company that offers some guarantees and is traded just like other public companies while exposing clients to the Bitcoin price appreciation.

Generally speaking, these treasuries are helping TradFi traders and investors to benefit from Bitcoin’s long-term price appreciation without having to deal with Bitcoin.