Twitter Chief Financial Officer Ned Segal said that the giant social media platform is looking into potentially putting bitcoin into its balance sheet. Additionally, the executive said that Twitter is exploring options to accommodate employees and vendors if they request to be paid in the first-ever cryptocurrency.
Twitter To Put BTC On Its Balance Sheet?
It seems that Tesla’s purchase of $1.5 billion in bitcoin has changed the game as numerous mainstream media outlets have taken the initiative to ask other companies about their views and potential involvement with the asset.
Twitter’s CFO Ned Segal was the latest to receive such a question during an appearance on CNBC’s Squawk Box. He commented that the social media platform is “watching closely” what other companies do to learn from their moves, and Tesla’s BTC purchase didn’t go unnoticed.
Segal noted that Twitter is exploring the possibilities of placing the primary cryptocurrency into its balance sheet, but only if the demand for it is there:
“When we think about our balance sheet, we think about how it’s invested and the currency in which it is invested relative to how we might pay people.
We have done a lot of the upfront thinking to consider how we might pay employees should they ask to be paid in bitcoin, or how do we pay the vendor if they ask to be paid in bitcoin and whether we need to have bitcoin on our balance sheet should that happen.”
Although Twitter is considering this option, Segal said that the company hadn’t made any changes yet.
Will Jack Dorsey Have It His Way?
Upon receiving the question about Twitter’s views on bitcoin, Segal was referred to the company’s CEO, Jack Dorsey – a well-known BTC supporter. Square, the financial services company that Dorsey also runs bought $50 million in bitcoin in late 2020.
Additionally, the executive updated his Twitter bio to display only the word “Bitcoin” last year and hasn’t changed it yet. Dorsey also praised the cryptocurrency while defending Twitter’s decision to ban the account of the former US President Donald Trump.
As such, the executive running a Bitcoin node could be the final piece that weighs in to Twitter’s decision to put BTC on its balance sheet.
Bitcoin’s Volatility Will Stop Corporations From Following Tesla’s Example, JPM Strategists Say
Tesla’s massive $1.5 billion BTC purchase could be too risky for other large corporations to follow, argued JPMorgan Chase & Co strategists. They reasoned with bitcoin’s volatility that could prevent more old-school investors and individuals from allocating funds in the crypto asset.
Corporations May Not Follow Tesla, JPM Says
Elon Musk’s electric vehicle and clean energy company has bought $1.5 billion (15% of its net cash holdings) in bitcoin, as revealed earlier this week. Apart from the immediate positive effect on the asset’s price, most crypto proponents believe that many more companies will follow.
Some of the initial speculations breached the world’s most valuable firm – Apple, while an anonymous Max Keiser source said it could be the IT giant Oracle.
However, analysts from the large US multinational investment bank JPMorgan offered the opposite opinion. Cited by Bloomberg, they admitted that the move would draw the spotlight on bitcoin but called it too risky for most:
“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin.” Even making a small 1% allocation in BTC “would cause a big increase in the volatility of the overall portfolio.”
The strategists argued that bitcoin’s annualized volatility is at 80%, which will make the entire corporate treasury portfolio significantly more volatile even with a 1% allocation.
Michael Saylor Disagrees
MicroStrategy’s co-founder and CEO, Michael Saylor, would probably disagree with JPM’s narrative that corporations might find investing in bitcoin too risky and volatile.
Upon also purchasing more than $1 billion in BTC for himself and the company that he runs, the executive decided to run educational panels for corporations on if and how they could turn bitcoin into their reserve treasury asset.
The reported figures seemed quite impressive as nearly 7,000 enterprises took part. Saylor also doubled-down on his belief that large companies should indeed put some, if not most, of their excess cash into the cryptocurrency during a recent CNN interview.
He asserted that the COVID-19 pandemic “changed everything” in the financial world. Global superpowers, including the US, began expanding their money supply by 15% or more, which is a trend that will only intensify in the next 4-8 years.
As such, Saylor believes that cash is a “dilutive” asset because it’s losing 15% of its purchasing power per year. In contrast, if corporations convert their cash holdings to the “best performing asset, which is bitcoin,” it would be “really good for shareholder value.”