According to JPMorgan strategists Nikolaos Panigirtzoglou, Bitcoin Volatility is the main obstacle to large companies adding BTC to their balance sheets. Tesla is the largest electric-car manufacturer in the world, revealing in its most recent filing that it has invested almost $1.5 billion in Bitcoin.
Research note stated that the volatility of cryptocurrency means mainstream corporate treasurers won’t follow Tesla’s lead. After Tesla’s recent announcement, the report noted the increasing Bitcoin inflows.
The volatility of Bitcoin is the main problem with the notion that mainstream corporate treasurers will be following the lead of Tesla. BTC could lead to a significant increase in volatility for large companies’ overall portfolios. According to the research note, BTC could increase portfolio volatility to 8% because of Bitcoin’s 80% annualized volatility.”
Tesla also announced that it plans to accept Bitcoin as a method of payment for its products, in addition to its $1.5 billion investment. After Tesla’s announcement, the price of the largest cryptocurrency in the world jumped by more than 20%.
Bitcoin’s volatile nature
Due to institutional investors’ rapid adoption, Bitcoin volatility has increased substantially since 2020. The latest weekly report from CoinShares shows that BTC’s trading volume has increased significantly since 2021. Finance Magnates previously reported on the supply problem BTC is currently going through. In an attempt to create a shortage of supply, BTC whales are moving money from digital exchanges into crypto wallets. Bloqport, a crypto Analytics research platform, announced today that Bitcoin withdrawals from cryptocurrency exchanges have reached their highest level in three years. These factors play an important part in Bitcoin’s volatility.
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