The recent decision by the regulatory body FASB in the United States to consider bitcoin as a "tangible asset" instead of "intangible" for accounting purposes has triggered an avalanche of analysis and speculation. Does this mean that large corporations and financial institutions will finally massively adopt the controversial crypto asset?
For influential bitcoin expert David Bataglia, this is a turning point confirming one of the 3 key factors that -according to mega investor Michael Saylor- would lead the price of bitcoin to $5 million this decade.
If this prediction is true, it would imply a return on investment of 6900X for those who buy bitcoin at its current value of ~$23,000. Of course, such a statement sounds preposterous to any traditional financial analyst. But let's look at the facts.
Until now, accounting regulations discouraged the acquisition of bitcoin by publicly traded companies. If its price went up, they could not record gains. If it went down, they had to record operating losses. The only way to reverse losses was to sell the bitcoins, which prevented taking advantage of its potential for recovery by keeping them long term.
By reclassifying it as a "tangible asset," bitcoin can be accounted for like gold: at its market value day by day. This solves the regulatory inconvenience for corporations interested in riding the wave of the most famous crypto asset.
While there are dissenting voices within the financial community, the truth is that companies like Tesla, MicroStrategy and BlackRock are already acquiring bitcoin or seeking to launch ETFs to provide access to their clients. And this is just the tip of the iceberg.
There are trillions in corporate cash that could partially migrate to bitcoin in the face of rampant inflation that is disintegrating the value of fiat money. For example, Apple has $200 billion in accumulated cash reserves. Wouldn't it make sense to protect a fraction of that gigantic reserve in a scarce, liquid asset with exponential growth like bitcoin?
Another factor predicting a massive influx of institutional demand is the scarcity of available supply. According to experts, less than 5% of all bitcoins issued are in circulation for buying and selling on exchanges. The rest remains in the hands of long-term holders.
Considering that its issuance is digitally limited, an avalanche of demand on such a small and inelastic supply could trigger an unprecedented price "shock."
In light of this scenario, it is tempting to speculate on what will be the next peak price bitcoin will reach before its inevitable and temporary correction. However, it is more sensible to focus on its fundamental value based on economic, technological and network aspects.
Bitcoin is not just a passing fad. It represents an unprecedented monetary innovation, for the first time combining programmed scarcity with decentralization, traceability and immutability. It disrupts the state monetary monopoly, empowers the individual and expands our notion of money beyond the physical realm.
Its adoption is unstoppable. Sooner or later, institutions and governments will have to accept a reality: bitcoin is here to stay. But not as an enemy, but as an option that will coexist to give the world a more robust, open and equitable financial system.
Instead of fearing or attacking bitcoin, it is time to understand and responsibly integrate it into our civilization. The benefits of doing so far outweigh the risks of ignoring its historical significance. Bitcoin represents the future, and that future is already here.
The images presented in the publication are my property and creation (Photopea)
