Legacy Firms Add Crypto to Treasuries: XRP, SOL, BTC Lead the Way
Key Takeaways
Traditional firms across various sectors are incorporating crypto into their financial reserves, indicating a shift towards mainstream adoption. However, analysts caution that market volatility and potential over-leveraging could threaten the long-term stability of this trend.
In a notable development, legacy firms spanning agriculture to textiles are now integrating crypto into their treasuries, marking its evolution as a mainstream financial strategy.
Traditional Firms Exploring Crypto
Recently, Nature’s Miracle, a U.S.-based agri-tech firm, announced plans to allocate up to $20 million in XRP to its corporate treasury.
Upexi, a consumer manufacturing company, revealed it had acquired 83,000 Solana [SOL], valued at approximately $16.7 million, as part of its treasury diversification strategy.
This trend extends beyond American firms.
Kitabo, a Japanese textile and recycling company listed on the Tokyo Stock Exchange for almost 80 years, disclosed plans to purchase ¥800 million (approx. $5.6 million) worth of Bitcoin [BTC] as part of its reserve assets.
These actions indicate a shift from speculation to strategic use of Bitcoin and altcoins for hedging and diversification.
What Could Be Behind This Shift?
The shift is partly inspired by success stories like MicroStrategy, whose aggressive Bitcoin accumulation strategy has garnered attention.
Metaplanet, a Japanese investment firm, is also adopting a Bitcoin-centric approach.
JPMorgan is reportedly exploring crypto-backed lending, potentially marking a significant milestone for institutional crypto finance. This would be the first time a major U.S. bank provides loans using crypto assets, such as Bitcoin, as collateral.
Bitcoin’s market performance, reaching an all-time high of $123,000 before settling around $118,645.46, also contributes to this trend.
Bitcoin's market dominance is evident at 61.95%, according to TradingView, suggesting investors favor Bitcoin in uncertain markets.
Challenges Ahead
Analysts are raising concerns about the long-term stability of corporate crypto treasuries. A report from Breed suggests that only a small fraction of Bitcoin-holding companies are likely to withstand future market volatility.
The report warns that many firms may be overleveraged and exposed to price swings.
A decline in Bitcoin’s value could trigger a chain reaction, where companies selling holdings to meet obligations risk accelerating a market collapse.
Caution is warranted because crypto's volatility can quickly become a liability.
Codeum provides smart contract audits and KYC verification to enhance the security and trust of blockchain projects, helping firms navigate the complexities of integrating crypto assets into their treasuries.