Last month, Jack Dorsey’s Block Inc. (formerly known as Square) launched a dollar-cost averaging program to bolster its Bitcoin reserves.
This initiative, spearheaded by CEO Jack Dorsey, commits 10% of the firm’s monthly Bitcoin-related gross profit to purchase additional Bitcoin. Dorsey emphasized to shareholders that this investment “transcends technology” and is an “investment in a future where economic empowerment is the norm.”
Block articulated its vision in an official statement: “We view Bitcoin as an instrument of global economic empowerment; it is a way for individuals worldwide to participate in a global monetary system and secure their own financial future.”
The move by Block adds to the growing number of public companies adding Bitcoin to their balance sheet. According to reports, over $19 billion in Bitcoin is held in public company treasuries. Will other companies follow the trend?
Block’s Bitcoin Strategy Revealed
Block has a history of significant Bitcoin investments. In October 2020, the company purchased 4,709 BTC at an aggregate price of $50 million, with each Bitcoin costing $10,618.
This was followed by another substantial purchase in February 2021, acquiring 3,318 BTC for $170 million at $51,236 per Bitcoin. As of March 31, 2024, Block holds 8,038 BTC on its balance sheet, representing about 9% of its total cash, marketable securities, and other cash equivalents.
The report further reveals that Block intends to use Time-Weighted Average Price (TWAP) orders to minimize slippage by buying BTC over two-hour windows for the most significant liquidity.
The payment company’s first foray into Bitcoin in 2020, with a $220 million investment in the pioneer cryptocurrency, has paid off, with the investment value having risen by 160%, according to reports.
Institutional Adoption is Just Getting Started
Dorsey’s personal predictions on Bitcoin are as bullish as Block’s strategic investment. He has consistently championed Bitcoin as the future of the global financial system, stating that Bitcoin is on track to become the internet’s native currency.
In a recent interview, Dorsey said that he expects Bitcoin to be worth “at least $1 million” or higher per coin by 2030 as people and companies work to grow and improve its ecosystem.
“The most amazing thing about Bitcoin, apart from the founding story, is anyone who works on it, or gets paid in it, or buys it for themselves – everyone who puts any effort in it to make it better – is making the entire ecosystem better, which makes the price go up,” he added.
Dorsey is not the only one forecasting a super bullish outcome for Bitcoin. Other executives, such as Cathie Wood, the CEO of Ark, have also predicted that Bitcoin could hit a $1.5 million valuation by 2030.
These bullish sentiments reflect a mass institutional adoption of Bitcoin and cryptocurrencies. Driven by growing confidence in blockchain technology, a need for diversification of investment portfolios, and hedging against the global economy’s inflationary pressure, Bitcoin adoption is taking off.
From hedge funds to multinational corporations, institutions increasingly recognize Bitcoin’s potential as a legitimate investment vehicle, as seen with the meteoric uptake of spot Bitcoin ETFs.
Corporate Trend of Increasing Bitcoin Holdings
Bitcoin’s trailblazing narrative as digital gold leads the way as the world’s largest amass more Bitcoin.
According to the reports, Michael Saylor’s Microstrategy is the world’s largest corporate owner of Bitcoin, with over 214,246 tokens valued at about $14 billion. Currently holding more than 1% of Bitcoin’s total circulation, Microstrategy has steadily bought Bitcoin since 2020, a move that has paid off given Bitcoin’s rally over the years.
Other corporate institutions holding a substantial amount of Bitcoin include Tesla’s 10,500, Galaxy Digital’s 17,518, and Marathon Digital’s 13,716 tokens. As Bitcoin’s price rallied to new all-time highs, the revenue generated by institutions with substantial Bitcoin holdings also rose.
For instance, Block’s total net revenue in the first quarter of 2024 surpassed market analysts’ expectations as the payment firm registered nearly $6 billion in revenue.
This increasing interest in Bitcoin from institutions has also seen BlackRock’s Larry Fink lean into Bitcoin and crypto over the last year despite his previous harsh stance on Bitcoin.
In a low-key announcement early this year, BlackRock began the second stage of its plan to spark a “revolution in the financial markets” with the launch of a tokenized private equity fund.
What’s more, with Elon Musk’s recent warning about a possible collapse of the U.S. dollar, the biggest banks on Wall Street have revealed plans to tokenize their assets through a system with Visa and Mastercard. Some of the main banks looking to test the tokenized system include JPMorgan, Wells Fargo, Citi, and U.S. Bank.
This move could further ignite a mass institutional adoption of Bitcoin and cryptocurrencies as weaknesses in the global fiat system continue to be exposed.
Conclusion: A Blueprint for Corporations to Explore Bitcoin
Jack Dorsey’s Block Inc. has made a bold statement with its strategic commitment to Bitcoin. By dedicating 10% of its monthly Bitcoin-related gross profit to additional Bitcoin purchases, Block is bolstering its own reserves and setting a precedent for other companies. Dorsey’s vision of Bitcoin as a cornerstone of global economic empowerment resonates within the corporate world, prompting other institutions to consider similar moves.
Block’s transparent and systematic approach, utilizing dollar-cost averaging and Time-Weighted Average Price (TWAP) orders, minimizes risks associated with market volatility and demonstrates a principled investment strategy. This could serve as a blueprint for other corporations, encouraging them to explore Bitcoin as a viable asset for their balance sheets.
The growing institutional adoption of Bitcoin reflects a broader confidence in blockchain technology and its potential to revolutionize financial systems. From hedge funds to multinational corporations, entities increasingly recognize Bitcoin’s value as a hedge against inflation and geopolitical uncertainty. The substantial holdings of companies like MicroStrategy, Tesla, and Galaxy Digital underscore this trend.
The evolving financial landscape, marked by initiatives such as BlackRock’s tokenized private equity fund and major banks’ plans to tokenize assets, points to a future where digital currencies play a central role.
