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Mid-cap companies and nonprofits are seeing substantial stock value increases by adopting Bitcoin treasury strategies similar to MicroStrategy, according to Abra CEO Bill Barhydt.
Mid-Cap Firms Follow MicroStrategy's Lead
Bitcoin (BTC) is quickly becoming the de facto currency for mid-cap corporations and nonprofits, according to Abra CEO Bill Barhydt. This development is in line with the approach taken by MicroStrategy (MSTR), whose stock has appreciated because of its large Bitcoin holdings, Coingape shares.
"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 during an interview with CNBC, he went on to say, "They love that model for holding crypto.".
The widespread belief that currency is an asset whose value declines over time is one element propelling this change. The market has a long-standing practice of treating cash on hand as a zero on balance sheets. Companies are witnessing a beneficial effect on their stock values as a result of substituting cash with Bitcoin, an asset that is gaining.
According to Barhydt, MicroStrategy's stock has been appreciating because the company has effectively included Bitcoin in its financial statements. Since cash is an asset that depreciates over time, the markets often assign a value of zero to it on a balance sheet. But if you swap it out for an asset that's going up in value, suddenly they aren't written off; in fact, they get a boost just for existing on your books.
Several midcap public firms have seen substantial gains in their stock value after implementing this method, according to Barhydt. When asked about companies that had replaced cash with Bitcoin, he mentioned several midcap public companies whose shares saw a significant overnight increase of 20, 30, or 40%.
Nonprofits Shift to Bitcoin for Stability
It is worth noting that nonprofits are also participating in this movement. Barhydt claims that some charities are shifting their funds to Bitcoin with the goal of keeping it for the long haul and using its value to pay for operations. Nonprofits have begun to convert their money into Bitcoin, he added. The chief executive officer of Abra also stressed that these groups "intend to hold that forever if they can."
The fact that these non-profits can "actually borrow against the Bitcoin so they can fund their operations by borrowing a depreciating asset against the value of an appreciating asset" is something that Barhydt brought out as well. The Spot Bitcoin ETFs, however, have been seeing a flood of institutional investors. This highlights the widespread acceptance of BTC as an asset class.
Innovative financial approaches, like Abra's separately managed accounts, are highlighted by the discovery as well. Businesses can keep ownership of their assets with these accounts. By doing so, the dangers of having assets recorded on the books of another corporation are circumvented.
There are far-reaching repercussions of this change. Many mid-cap companies and philanthropies with large cash reserves will, according to Barhydt's prediction, turn these into bitcoin. Furthermore, following the Bitcoin acquisition, he anticipates that the stocks of these companies will follow suit with MicroStrategy's stock action.
Bitcoin Adoption Predicted to Rise
Abra CEO said, “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.”
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