Billions in Bitcoin locked up in trusts, ETPs and corporate treasuries

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Bitcoin close-ended trusts and exchange-traded products (ETPs) currently hold around US$43.2bn worth of the digital currency, according to new analysis.

On Tuesday, Nickel Digital Asset Management highlighted that the funds in question showed a “strong North American bias”, with US and Canadian funds accounting for 65% of the total Bitcoin holdings.

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Nickel added that the funds held the Bitcoin allocations on behalf of clients, including a range of retail investors, asset managers and, increasingly, institutional asset allocators.

The investment manager’s analysis also revealed that 19 listed companies with a combined market cap of over US$1 trillion have invested in around US$6.5bn worth of Bitcoin, with eight new firms including Tesla Inc (NASDAQ:TSLA) having allocated funds to the cryptocurrency in the first four months of 2021.

Of the 19 firms in the data, 13 are US and Canadian companies, with three being European, one Turkish, one from Hong Kong and one from Australia.

Nickel said the findings “fit well” into the overall trend of increasing allocations to digital assets in the financial sector, highlighting research earlier in the year that showed 81% of institutional investors and wealth managers it surveyed across Europe expected to see an increase in corporations using Bitcoin for their treasury reserves.

“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…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 US$18 trillion of negatively yielding global bonds, has encouraged many corporations to contemplate an allocation to alternative assets”, Nickel co-founder and chief executive Anatoly Crachilov said in a statement.

“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 CEO added.

In late afternoon trading in London on Tuesday, Bitcoin was up 2.4% in the last 24 hours at US$40,168, giving it a market cap of US$752bn.

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