New analysis (1) by Nickel Digital Asset Management (Nickel) reveals that 19 listed companies with a market cap of over $1 trillion have around $6.5 billion invested in Bitcoin. They originally spent $4.3 billion buying the cryptocurrency.
While seven companies made their Bitcoin purchases in 2020, as many as eight new entrants, including Tesla, have allocated to Bitcoin in just the first four months of 2021. While Tesla later suspended acceptance of bitcoin as a means of payment for Tesla cars, it remained invested in the cryptocurrency.
There is a notable US and Canadian bias in these allocations. Of the 19 listed enterprises reviewed, 13 are US and Canadian companies, three are European, one is Turkish, one is from Hong Kong and one is Australian.
Nickel’s analysis reveals a further 17 listed companies have purchased Bitcoin, without revealing the full details of their portfolio composition at this stage.
Further analysis by Nickel reveals a staggering $43.2 billion worth of bitcoin is held through various bitcoin closed-ended trusts and exchange traded products. These investment funds hold these allocations on behalf of their clients, including a range of retail investors, asset managers, and – increasingly – institutional asset allocators.
The geography of these funds exhibits a similar strong North American bias, with US and Canadian funds accounting for an overwhelming 65% of the above holdings.
Nickel research (2) from earlier this year with institutional investors and wealth managers across Europe who collectively manage over $110 billion in assets, revealed that over the next two years 81% expect to see an increase in corporations using Bitcoin for their treasury reserves. Of these, some 29% expect to see dramatic growth in this trend.
Therefore, recent findings fit well into the overall trend of increasing allocations to digital assets.
Anatoly Crachilov, co-Founder and CEO of Nickel Digital, commented:
“A growing number of corporations have recently made significant multi-billion allocations to Bitcoin as part of their treasury reserve strategies. This, coupled with a confirmed inclusion of crypto assets in the portfolio construction by leading global asset managers such as Paul Tudor Jones, Bill Miller, Ruffer, and Guggenheim Partners, is a very important endorsement for Bitcoin’s emerging functionality of the hedge against inflation.
“The COVID-19 crisis and the expansionary monetary policies implemented by the central banks in response to the crisis have dramatically changed the outlook for fiat currencies, heightening the risk of currency debasement. This, coupled with the increasingly inflationary guidance by Fed and an ever-expanding pile of $18 trillion of negatively yielding global bonds, has encouraged many corporations to contemplate an allocation to alternative assets.”
“Bitcoin is a unique non-discretionary asset, with monetary policy hard-coded on the base protocol level, without anyone’s ability to inflate or alter the number of units in circulation. It offers important attributes of an immutable and verifiable supply, with transparent and predictable issuance schedule. Furthermore, it is designed with important deflationary characteristics, whereby its supply predictably decreases by 50% every four years (through the process known as “halving”). This makes it an appealing anti-inflationary asset for many corporates and asset managers alike.”
“The crypto assets space remains volatile as it is going through the early stages of an adoption curve. However, increasing allocations by large-scale institutional and corporate players is expected to lead to a reduction of this volatility over time, thanks to a longer-term, stickier type of capital brought by those investors, as well as a much larger liquidity pool of crypto ecosystem.”
Nickel Digital’s infrastructure is designed to offer various access points to the crypto market
Nickel currently has four funds investing in the digital asset space. Its market-neutral Digital Asset Arbitrage Fund pursues an absolute return strategy without expressing directional views on the underlying cryptoassets market. It exploits market inefficiencies and price dislocations and harnesses swings of volatility to deliver consistent positive returns within a strictly defined risk management framework. Since inception 24 months ago, the fund has delivered strong risk-adjusted returns with no drawdown months and Sharpe of over 4.
The Nickel Diversified Alpha (Digital Factors) Fund is a non-directional multi-strategy fund which wraps a portfolio of attractive but hard-to-access and capacity-constrained strategies into a single, investible fund. Among the strategies it deploys are high-frequency market making, statistical arbitrage, relative value, trend following, and momentum.
Digital Leaders DeFi Fund is designed to capture the growth potential of the broader digital assets space, spotting early winners in Decentralised Finance, the area of greatest financial innovation.
Nickel’s Digital Gold Institutional Fund, a Bitcoin tracker, provides secure, efficient, transparent, and liquid access to physically allocated Bitcoin. It delivers institutional-grade precision of trade execution available on both weekdays and weekends with one of the industry’s lowest expense ratios.
(1) Nickel Digital analysed data from https://bitcointreasuries.net/ on 14th June 2021
(2) Nickel Digital commissioned the market research company Pureprofile to interview 50 wealth managers and 50 institutional investors across the US, UK, Germany and Switzerland. The survey was conducted online in January 2021.