Corporate Bitcoin Bets Pay Off at First but Lead To Long-Term Underperformance—CoinShares

Key Takeaways

• A few public companies have steadily increased their Bitcoin holdings, with significant growth in late 2023 and early 2024.
• Bitcoin volatility remains high but is gradually stabilizing.
• Companies holding Bitcoin often outperform the Nasdaq in the short term but tend to underperform over longer periods.

A growing number of public companies have added Bitcoin (BTC) to their balance sheets, with accumulation accelerating in late 2023 and early 2024.

While this strategy has delivered short-term gains, data suggests the long-term impact is less favorable.

According to CoinShares , companies that invest in Bitcoin typically see their stock prices rise in the first six months, benefiting from Bitcoin’s price appreciation.

However, as time passes, these firms tend to underperform both the Nasdaq and Bitcoin itself.

Short-Term Wins, Long-Term Challenges

The data highlights a pattern: when Bitcoin rallies, companies holding it experience a surge in stock performance. However, when Bitcoin’s price declines, the negative impact is amplified, dragging these stocks down more than traditional tech equities.

Companies with Bitcoin exposure often lag behind market benchmarks over a 30-day to 90-day period due to price corrections. Over a full year, their median performance has underperformed both Bitcoin and the Nasdaq.

The trend is particularly evident in firms like Strategy and Tesla, which have made major Bitcoin investments. While these bets have generated excitement and short-term stock gains, the long-term results have been mixed.

The data, however, should be interpreted cautiously for CoinShares’ Max Shannon , considering that the small sample size of only ten companies skews the results.

Volatility Remains a Double-Edged Sword

Bitcoin’s volatility has been both a driver of returns and a risk factor for companies holding it. Since Strategy’s first Bitcoin purchase, the asset’s 30-day annualized volatility has dropped from 113% to 47%, signaling a gradual stabilization.

However, Bitcoin remains more volatile than traditional assets, meaning companies tied to its performance face ongoing risks. As institutional adoption increases and financial products mature, volatility may decline further—but for now, it remains a key challenge.

Corporate Bitcoin Holdings: A Risky Long-Term Strategy?

While Bitcoin exposure has helped some companies outperform in the short term, the data suggests that over time, these bets may do more harm than good.

With Bitcoin’s volatility still a major factor, firms investing in the asset must weigh short-term gains against long-term risks.