Bloomberg reports that Wall Street finance chiefs are more cautious about pouring corporate funds into Bitcoin after last week’s 30% drop in prices.
Given the return of Bitcoin’s infamous price volatility, with the price of the largest cryptocurrency falling thousands below the $ 41,900 high set in January, the appeal of this strategy may have diminished, according to the company executives that Bloomberg used spoke. Bitcoin has since made up some of those losses and is now trading at $ 35,700, according to CoinDesk 20.
Sharp fluctuations reduce the attractiveness of the leading cryptocurrency as the company’s cash reserves are mostly rainy day funds to help keep core business needs going in unexpected downturns.
“It would be a red flag for investors if a company were to buy financial assets for speculative purposes unrelated to its core business,” said Michael O’Rourke, JonesTrading’s chief market strategist.
Robert Willens, associate professor at Columbia Business School, told Bloomberg that investing in Bitcoin with these funds poses a risk that CFOs may not want to endure after last week’s price action.
“Is it a smart strategy? It could be. But if this is not the case it could of course endanger the very existence of a company, ”said Willens.