By Niket Nishant and Bhanvi Satija
(Reuters) – U.S. President-elect Donald Trump’s pro-crypto stance is prompting small businesses to allocate portions of their cash to bitcoin, challenging the dominance of traditional assets as companies look for more robust inflation hedges.
Over the past month, biotech firms Enlivex Therapeutics, Acurx Pharmaceuticals and Hoth Therapeutics have set a target of purchasing up to $1 million of bitcoin to hold as a treasury reserve asset.
The moves underscore the growing appeal of bitcoin as a legitimate tool for corporate treasurers, who see it as a better alternative in a landscape fraught with economic uncertainty, geopolitical risks and fiscal concerns that have complicated the outlook for conventional assets like Treasuries and cash.
“The benefits of bitcoin being used as a treasury reserve asset are obviously apparent. Inject bitcoin into a company and now it’s on its way into the top 100 company (by market value) rankings,” said Samson Mow, CEO of crypto infrastructure firm JAN3.
Corporations held around 3.3% of the total supply of bitcoin as of August, up 30% year over year, according to a report by bitcoin-focused financial services firm River.
“The things that we’ve been going through in the last three or four years were such that evaluating bitcoin as an additional tool became a must,” Enlivex CEO Oren Hershkovitz said.
“We were considering this regardless of Trump’s election, but it was definitely another argument in favor of executing this strategy.”
Once confined to the fringes, bitcoin has soared in popularity in the last few years after endorsements from major institutions. Trump’s promise of a crypto-friendly administration has grown its clout further.
“The next four years should be pretty good for crypto,” Acurx CEO David Luci said.
The incoming president has said he wants to make the U.S. the “crypto capital of the planet” and has promised a council to advise on industry-related policy.
Still, skeptics say the volatility risks associated with bitcoin, given its notorious price fluctuations, make it unfit as an inflation hedge.
Securities and Exchange Commission Chair Gary Gensler has called the asset speculative and volatile, even as the regulator approved spot bitcoin exchange traded funds earlier this year.
The currency has also mirrored declines in the S&P 500 index during periods of economic slowdown in the past, calling into question its effectiveness.
But such criticism is “unfair,” said Henry Robinson, co-founder of crypto mining firm Decimal Digital Currency, adding that “bitcoin is not uniquely volatile.”