How Paying Employees in Bitcoin Effects Volatility

When Bitcoin first came into existence during the great recession, it was an extremely volatile investment vehicle. Its main use cases were speculation, and the market cap was tiny, causing massive fluctuations in price, making it ripe for rampant manipulation.

Over a decade later, it is safe to say that the asset has not only outgrown that characterization but is also safely evolving into so much more. As use cases for Bitcoin increase over time, the less volatile it has become.

Bitcoin’s history of volatility has pushed institutional investors away – 30% overnight drops in your portfolio are scary enough for your personal portfolio and are even more worrisome for your corporate treasury. But due to the increasing level of adoption and the surge of institutional funds into Bitcoin, the asset is less inclined to the wild swings of the previous years, especially if you have an intelligent, risk-managed trading strategy.

This year alone, we have seen the bull cycle of the asset push it to new heights, especially as more financial institutions, pension funds, and hedge funds seek intelligent ways to hedge against inflation. There is no end in sight as money printing ramps up, and the Fed creates policies that cater to inflation rather than stifle it.

Additionally, Lawmakers continue to lighten their stance on Bitcoin and other digital assets. Congressman Kevin McCarthy advised that “those who are in government that makes policy, better start understanding what it means for the future.” Interestingly, his view is also shared by Hester Pierce, a commissioner of the SEC who noted that “lawmakers cannot ban Bitcoin.”

As more institutions adopt Bitcoin and other digital assets, volatility will continue to subside. One unforeseen by-product of this is employers paying employees in Bitcoin. 

In 2019, New Zealand had approved that workers in the countries could now be paid in Bitcoin, skeptics and critiques had had a field day in bemoaning this move as unnecessary but two years later, especially as we have begun to witness the level of stability and the coin’s ability to serve as a store of value; individuals and institutions alike have begun to request that their payment be made in this invaluable coin. 

Today, more employees are asking to be paid in Bitcoin, which is a clear signal that they are less concerned with the volatility than they were in the past. However, Bitcoin isn’t considered a currency, and no one out there really wants to spend their Bitcoin, which is another signal its matured as an asset.

Miami

 

Miami is a forward-thinking city that is attractive for tech and digital asset startups alike. Miami Mayor Francis Suarez wants to allow city workers the option of getting paid in Bitcoin. He also proposed allowing people to pay all or part of their property taxes or city fees in crypto.

Over the last year, Suarez has pitched Silicon Valley Investors on the allure of moving to Miami as they’ve become disenchanted with California’s regulatory framework and taxes. As local governments like Miami begin to adopt it and pay their city employees in Bitcoin, volatility could continue to subside, making it safer to allocate to your portfolio and get paid in it over devaluing fiat currencies.

Tesla

 

The leading electric carmaker recently made a huge $1.5 billion investment in Bitcoin by adding it to their treasury reserves. 

In a matter of days after its BTC purchase, the firm announced that it would now support using the digital coin as a payment option for its cars. This was a long-deserved recognition for BTC as it helped its value rise to new highs while also spurring other institutional investors to adopt the asset.

Per Bitcoin Magazine, “Tesla is operating its own Bitcoin nodes and that it would retain any bitcoin it received, as opposed to selling it for fiat currency.” Another huge indicator that the asset was viewed in a positive light by the firm.

Interestingly, the automobile maker could also begin to pay Bitcoin as rent on some of its rented properties. Caruso, a real estate giant and owner of some properties rented by the Elon Musk company, also recently announced accepting the coin as payment for its rents. 

Rick Caruso, the firm’s CEO, says the decision was borne out of the need to be prepared for eventualities as “cryptocurrencies are becoming widely used.” As more employers pay in Bitcoin, it will continue to become less risky to allocate your portfolio to riskier not to have intelligent exposure.

Time Magazine

 

Michael Sonnenschein, the CEO of one of the largest holders of the coin Grayscale, announced a partnership with Time Magazine. The media house would create a video series that seeks to educate the public about cryptocurrencies. Surprisingly, what garnered more attention was the payment method chosen by these huge companies.

The announcement revealed that the New York-based publication was willing to receive its payment in Bitcoin; not only that, it was also mentioned that the firm was going to be adding Bitcoin to its balance sheet. This was like a confirmation of the company’s earlier pro-crypto leaning.

Recently, the firm wanted to employ the services of a chief financial officer who was “comfort with Bitcoin and cryptocurrencies” because “the media industry is undergoing a rapid evolution,” and “TIME is seeking a Chief Financial Officer who can help guide its transformation.” 

 

MicroStrategy

 

Last year, during the coronavirus pandemic’s peak, MicroStrategy made its first foray into the Bitcoin space. Fast forward to today, and the business intelligence and data analytics company is one of the biggest pro-Bitcoin companies in the world. The Michael Saylor-led company not only holds over 90,000 units of BTC but the firm also recently decided to pay its board of directors in the asset.

Per the SEC filing made by the company, “the Board cited its commitment to bitcoin given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.”

MicroStrategy’s decision might push other large institutions into adopting the asset for its workers. You will recall that the company had organized a “Bitcoin For Corporations” summit where it looked to help onboard other organizations into the bitcoin frenzy.

 

Southampton FC

 

Bitcoin has also enjoyed a huge amount of support in the sports community; an indicator of that is the recent partnership between Premier league football club Southampton, and Coingaming which would see the football club receive performance-related bonuses in BTC.

Those in the know about the partnership’s details have called it “the biggest sponsorship agreement” in Southampton’s history. This means that players of the football club would receive bitcoin as their bonus payments which is a very bullish sign of the acceptability and adoption of the coin as a payment option.

Notably, a former premiership club, Watford FC, had allowed their fans to buy their merchandise using the crypto asset in 2019. 

Jim Cramer

 

If you are quite familiar with the Mad Money Show on CNBC, you definitely have come across his face analyzing issues and giving insights into economic situations. In one of his shows, the popular TV host was asked if he was open to receiving his pay in the leading crypto asset, and his response was in the affirmative. The TV host also took to his Twitter handle to state that “pay me in bitcoin explicitly!!”

According to Cramer, “Bitcoin is a store of value, and its market cap has the potential to hit $3 trillion soon,” before hinting that he could actually hold the leading digital asset. Already, the asset’s market cap is over $1 trillion, and it has the potential of meeting Cramer’s prediction soon, especially if the asset continues to witness an increase in its value.

 

Final Thoughts

 

There is no denying that Bitcoin has had tremendous growth in the past decade. It has grown from an asset that was almost worthless to worth over $60,000 and something that institutions and retailers alike now see as a viable payment method and a store of value.

Demand will continue to rise as the volatility level, which is drastically diminishing, goes lower, especially as more institutions adopt the asset as a store of value, thereby protecting themselves against the growing inflation rate that comes with fiat.