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What is going on with Bitcoin 2021?


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Cash is being diluted by a few % per year. Since they have many billions in cash this small % comes in the form of millions and even tens of millions of dollars worth of dilution for them.

This cash dilution has been going on for decades and typically in these cases large corps would look to treasury bonds. They essentially purchase these “same as cash” US Treasury bonds and keep those which increase a few % per year. And the growth on those bonds offsets the loss on their pure cash and all is well with the world.

This year however there was a change. The interest rate in treasury bonds is near 0% so they don’t have anything to offset their cash dilution. Compounding on this the worlds central banks are “printing” more money. This is INCREASING the rate of dilution. Where before they were losing 1-2% now they fear they could be losing 7-10% due to this.

The result is a strong demand for an alternative high liquidity (same as cash) asset. And Bitcoin is being seen as an option for some more progressive companies.

This might seem like no big deal just a few companies buying some BTC. But these corps have GIANT cash reserves and huge pressure to plug the holes of dilution. They must act in the best interest of the shareholders and ignoring the problem could be seen as mismanagement. In the most bullish cases (microstrategy) they are putting 100% of their cash into Bitcoin ($BILLIONS). More conservative companies (square, Tesla) are putting 1-10%.

But there’s thousands upon thousands of corporations that still do not have a cash dilution mitigation strategy that includes Bitcoin. And they are starting to adopt. Black rock, the world largest hedge fund with $7TRILLION of assets under management has made public they have an interest. So have major banks and payment processors (JPMorgan, visa mc)

 

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