Although several well-known companies recently allocated funds in BTC, a study among 77 financial executives showed that the overall number of firms planning to get on the bitcoin bandwagon is relatively modest at just 5%. Somewhat expectedly, most skeptics justified their decision with BTC’s volatility.
Most CFOs Have No Plans To Buy Bitcoin
Tesla shocked the world last week after news broke that Elon Musk’s electric vehicle giant had purchased $1.5 billion in bitcoin. Apart from the immediate price boost, the allocation had further consequences on BTC as numerous other companies and executives started offering their opinion on whether they will or will not follow Tesla’s example.
So far, though, it seems that most companies have a little-to-no intention of putting the primary cryptocurrency on their balance sheets. At least, this is what data from a Gartner-compiled survey says.
The research company asked 77 financial executives (including 50 CFOs) about their companies’ approach towards bitcoin. Despite the growing interest, though, the percentage of those who might explore the potential benefits of buying BTC still remained quite low.
As of February 2021, just 5% said they plan to buy bitcoin as a corporate asset during this year. In contrast, 84% expressed no plans to “ever hold” the primary cryptocurrency.
Financial Risks And Volatility To Blame
While commenting on why they won’t buy BTC, the polled executives highlighted several main reasons. Naturally, bitcoin’s infamous volatility occupied the first place, as it raises the risks for investors.
“Eighty-four percent of the respondents said that bitcoin’s volatility posed a financial risk. It would be extremely difficult to mitigate the kind of price swings seen in the cryptocurrency in the last five years.” – noted Gartner Finance’s Chief of Research, Alexander Bant.
As the graph above illustrates, other reasons include board risk aversion, slow adoption, regulatory concerns, and lack of knowledge.
Bant explained that the cryptocurrency is still very early in its adoption and development cycle, which makes traditional investors warier of allocating any funds in it. However, he admitted that BTC’s growth had garnered their attention, and if the asset continues to improve, including image-wise, it could have a significant role in companies’ balance sheets in the future.