Bitcoin’s (BTC) volatility remains a stumbling block for massive adoption as most finance chiefs don’t intend to invest corporate cash in the cryptocurrency this year
A recent survey shows that only 5% of financial executives intend to invest corporate funds in Bitcoin this year. Most executives cited Bitcoin’s volatile price as the major drawback as the cryptocurrency rallied by nearly 100% since the start of the year.
The survey published by Gartner yesterday interviewed 77 finance executives (including 50 CFOs). Bitcoin has been gaining massive adoption from both retail and institutional investors in recent months. Institutional investors began trooping into the market a few months ago as they believe Bitcoin is an asset that would hedge their wealth against inflation. As a result, institutional investors added billions of dollars into the Bitcoin market and were the major contributing factor behind the ongoing bull market.
Despite Bitcoin’s rising popularity, 84% of the polled finance executives said they don’t plan to ever hold BTC as a corporate asset. Alexander Bant, Gartner Finance’s chief research officer, said, “Eighty-four per cent of the respondents said that Bitcoin’s volatility posed a financial risk. It would be extremely difficult to mitigate the kind of price swings seen in the cryptocurrency in the last five years”.
Bant added that there are several unresolved issues regarding using Bitcoin as a corporate asset. It is unlikely that the cryptocurrency will receive the kind of corporate adoption it deserves until they gain more clarity.
While most of the respondents don’t want to hold BTC in their corporate reserve at the moment, 71% of them are interested in knowing what other companies are doing with Bitcoin. The finance executives will probably decide to buy the cryptocurrency when they know what others are doing with it.
Regulatory uncertainty is another crucial issue hampering the massive adoption of Bitcoin. The survey shows that 68% of the respondents want to hear more about the cryptocurrency from regulators and better understand the risks involved in holding it.
Bant added that as a developing asset, finance leaders who are tasked with ensuring corporate financial stability don’t have the luxury of making speculative leaps into unknown territory.
The survey results are in line with the observations made yesterday by Wedbush Securities, a Los Angeles-based privately held investment firm. According to Wedbush, Tesla’s recent Bitcoin move could spark further corporate adoption. However, the firm doesn’t see the adoption happening in the short-term due to the cryptocurrency’s price volatility. Wedbush said less than 5% of public companies would invest in BTC over the next 12-18 months.