We keep seeing examples of big companies getting involved in cryptocurrency. Figures like Michael Saylor of MicroStrategy and Elon Musk of Tesla are packing all their money into the crypto space and getting all that they can out of the world’s number one digital currency, but according to Jerry Klein, the managing director of Treasury Partners, not all the planet’s big companies and financial figures are going nuts for BTC.
Jerry Klein: Bitcoin Is Still Too Risky
The last several months have been wrought with crypto love amongst institutions and those that run them. We have seen countless examples, and yet Klein seems to believe that the news is blowing all this out of proportion. He claims that he works with several financial figures, many of whom operate some of the biggest firms out there, and he says not one of them have shown any interest in bitcoin or cryptocurrency.
In a recent interview, he states:
I have been working with CFOs and treasurers for 25 years and reviewed hundreds of investment policies. Virtually all emphasize safety and liquidity as the top priority. Very few companies will accept even modest risk with corporate cash… Not one of our clients has expressed interest in bitcoin. I do not see bitcoin being widely adopted as an investment vehicle for corporate cash.
As it stands, while bitcoin may indeed be popular, it is still rather risky in several people’s eyes. The fact is that BTC remains one of the most volatile assets around, and while the currency is doing well as of late, every investor knows that at any point in time without any given risen, things could ultimately turn sour, and many big company owners are not interested in taking that chance.
At the time of writing, while bitcoin has recovered somewhat from its recent dip and risen back to $57,000 per unit, the currency incurred a $15,000 loss a few weeks ago that saw it trading for $49K. Klein says:
The priorities are safety, liquidity and yield, with yield a distant third… I have worked with many clients with excess cash balances. They do not seek to invest that extra cash in a way that would risk principal for a higher return.
Many Don’t Want to Take a Chance
Klein stated that for the most part, many of the companies and individuals he spends time with do not want to take the slightest chance that their assets will dip in value. Thus, bitcoin is not the popular cash alternative everyone makes it out to be. He claims:
In 2016, when the regulations changed and prime money-market funds were forced to convert from fixed to floating net asset value, assets in prime funds decreased by approximately 90 percent, and that was due to fear of even tiny losses. This is just an example of how conservative corporate investors are.