Last week, US Fintech giant Square made headlines in the mainstream media for investing $50 million in Bitcoin. This represents about one percent of the total assets of the $90 billion company.
Although it is a big step, there are some Bitcoin maximalists who criticize the one percent figure because it is too small to have an impact on the increasingly liquid crypto market.
But analysts note: if all companies follow Square’s example, a massive capital wave would invade the Bitcoin Bank space and easily drive it to all-time highs.
What if everyone followed Square’s example in buying Bitcoin?
According to crypto-venture investor and analyst Ian Lee, US companies currently have assets totaling $25 trillion.
This means that if each of these companies followed Square’s example and invested exactly one percent of their assets in Bitcoin, BTC would receive inflows of $250 billion. Remarkably, this „excludes financial companies, institutional investors, governments and private clients – globally speaking.
You may think that $250 billion is not much. After all, Bitcoin currently has a market capitalization of only about $200 billion.
But it is worth considering the „Fiat Amplifier/Multiplier“ effect.
The effect suggests that for every fiat dollar invested in Bitcoin, the market capitalization of BTC increases by more than this dollar.
Chris Burniske, a partner at Placeholder Capital, once mentioned that his company uses the 2-25x range. With an estimate of five times that, the $250 billion that could come into the room if companies follow Square would result in a growth of over $1.2 trillion in BTC’s market capitalization, meaning that the price would shoot up to over $50,000.
Easy entry for investors
Although Lee’s remarks are theoretical, Square is trying to make it easy for other companies to acquire Bitcoin.
In fact, Square, along with the other companies that have acquired Bitcoin MicroStrategy, has published the respective resources and websites to teach other companies and their CFOs how to invest large sums in BTC and then store the asset.
Both companies also comment on why Bitcoin makes sense in the current macroeconomic environment. Jack Dorsey, CEO of Twitter and Square, for example, called it the Internet’s parent currency.
Many believe that the „background for the institutional launch of Bitcoin“ is stronger than ever.
Andrew Kang, founder of Mechanism Capital, cites the following reasons why buying Bitcoin now makes sense: volatility has declined massively, inflationary trends are emerging, returns in other markets are low, the stock market and other legacy markets have high valuations – and the crypto space is confirmed by Wall Street.