Bitcoin is emerging as a diversification strategy for institutional investors.

As reported by Cointelegraph, after MicroStrategy, mobile payment giant Square and asset manager Stone Ridge Holdings that holds over $10 billion in assets have each disclosed that the companies have invested an amount worth $50 million and $114million respectively in Bitcoin. Announcement for Square was made by co-founder Jack Dorsey.

The move may have come as the Federal Reserve’s balance sheet balloons by $ 3 Trillion and the Dollar depreciates against Bitcoin by 70%.

The move is not surprising, as gold is underperforming and bond yields is next to nothing , so companies with liquidity ought to put their cash somewhere — so , they are turning to Cryptocurrency..especially Bitcoin. Anthony Pompliano, Co- Founder and Partner at Morgan Creek Digital Assets, a multi-investment strategy firm for blockchain and digital assets says that “ Corporations are using Bitcoin as reserve asset for part or majority of their treasury.”

One may say that devaluation of the Dollar is a short-term phenomenon caused due to coronavirus pandemic and government spending. However, Dr. Saifdean Ammous , Professor of Economics at University at Lebanese American University says that a growing segment of companies now believe that companies can no longer hold their reserves in Government Bonds long enough and expect to outperform inflation. To further this point he adds that , “Bitcoin has emerged as a favorite diversification play away from bonds and will likely attract more institutional investors.”

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