MicroStrategy Bitcoin Effect: Midcap & Non-Profit Firms Convert Treasury To BTC

Abra CEO Bill Barhydt revealed that midcap companies and nonprofit organizations are increasingly converting their treasuries to Bitcoin (BTC). This trend follows the successful strategy employed by MicroStrategy (MSTR), which has seen its stock appreciate due to its substantial Bitcoin holdings.

Midcap & Nonprofit Firms Tap Into MicroStrategy Bitcoin Tactics

“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. “They love that model for holding crypto,” he added, according to a CNBC interview.

One of the driving factors behind this shift is the perception of cash as a depreciating asset. Traditionally, markets discount cash reserves to zero on balance sheets. Hence, by replacing cash with Bitcoin, an appreciating asset, companies are seeing a positive impact on their stock values.

Barhydt emphasized, “I’ve seen the stock appreciation for MicroStrategy because they’ve effectively put Bitcoin on their balance sheet. Markets traditionally discount cash on your balance sheet to zero right because it’s a depreciating asset. But if you replace that with an appreciating asset, now all of a sudden they don’t get discounted to zero; it gets a bump and a bonus for being on your balance sheet.”

Barhydt disclosed that several midcap public companies have already experienced significant increases in their stock value by adopting this strategy. “We’ve seen several midcap public companies’ stock get a huge bump overnight – 20, 30, 40% by replacing the cash with Bitcoin,” he said.

Interestingly, nonprofits are also joining this trend. According to Barhydt, some nonprofits are converting their treasuries into Bitcoin with the intention of holding it long-term and leveraging its value to fund operations. He said, “We’ve even seen nonprofits now that have started to convert treasury into Bitcoin. Abra CEO also highlighted that these organizations “intend to hold that forever if they can.”

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Future Outlook On BTC Adoption

Barhydt also highlighted that these NPOs can “actually borrow against the Bitcoin so they can fund their operations by borrowing a depreciating asset against the value of an appreciating asset.” Meanwhile, Spot Bitcoin ETFs have been witnessing significant institutional influx. This underscores BTC’s adoption as a mainstream asset.

The revelation also emphasizes the importance of innovative financial models, such as the separately managed accounts offered by Abra. These accounts allow companies to retain title to their assets. This avoids the risks associated with placing assets on another entity’s balance sheet.

The implications of this shift are far-reaching. Barhydt predicts that many midcap firms and nonprofits with substantial dollar reserves will convert these into BTC. Moreover, he expects the stocks of these companies to mirror MicroStrategy stock action after the Bitcoin acquisition.

Abra CEO stated, “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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