Cardone Capital launches 10X Miami River Bitcoin Fund: converting cash flow to BTC

Why are companies increasingly exploring the bitcoin treasury strategy and how does this shape the business world?

According to a February, 2024 report by insidermonkey.com, cash held by non-banking US companies were at $6.9 trillion, nearly equivalent to the GDPs of Germany and India combined at the time.

With ongoing trend of companies embracing the strategy of buying and holding bitcoin with idle cash reserves, trillions of dollars are expected to flow in BTC over the next couple decades.

It does not make any apparent sense for nonbanking companies to hoard large piles of cash and collect only interest when cash could be invested for larger profits. According to the latest figures, the total cash reserves of the nonbanking US companies are a whopping $6.9 trillion, nearly equivalent to the GDPs of Germany and India combined. Today, cash represents $1 out of every $5 of total assets held by nonbanking US firms.

As we dig a little deeper, the reasons for keeping cash reserves become clearer. According to analysts, companies are hoarding cash because it helps them avoid premature failures that might decimate shareholder value. It allows them greater investment and operational flexibility. Economies around the world are increasingly becoming knowledge-based. The ‘winner-take-all reward’ model is quite prevalent in industries around the world. So, nonbanking firms are hoarding cash to utilize now-or-never opportunities. — Insidermonkey.com Report.

There are quite some interesting things highlighted in the quoted article and one that really stands out is:

— It doesn't make sense to hoard cash.

Except it did actually make sense at the time, and the reason is right in the very next line of that sentence being the interest earned on those cash piles.

Now, these companies have a better alternative where a dual strategy can be adopted for stability or specifically to hold to their risk tolerance levels.

The argument against this common act to hoard cash by non-banking US companies is that there were options to invest these cash flows for higher profits but the problem is that this usually meant investing in alternative industries that most often than not, may not have had aligned values with these individual companies.

There's also the introduced centralized point of failure that's to be expected where it's clear that with something like Bitcoin, we are dealing with an investment not backed by a single centralized entity and one that has an impeccable track record.

As explored in the linked report, cash allows these companies avoid premature failures whilst accessing greater investment and operational flexibility. Bitcoin, now, offers this with the added benefits of truly outsized returns in comparison to cash and any traditional asset or investment.

The shift to Bitcoin Treasury + Cash reserves

I imagine that eventually anything left of cash reserves will be moved into stablecoins where the value maintained remains the same, with associated interest payments but with added usage flexibility.

That said, Bitcoin (and eventually more decentralized crypto assets) will become a vastly explored option for thousands of companies to store value and potentially raise money for funding continued operations through future price appreciations of said treasury assets.

We are in the early phase of this reality and more news reports are expected like the one below:

Cardone Capital, a real estate investment firm with over $5 billion in assets under management, launched the 10X Miami River Bitcoin Fund, a dual-asset fund consisting of a 346-unit multifamily commercial property located on the Miami River in Miami, Florida, and $15 million of Bitcoin.

In an interview with Cointelegraph, Cardone Capital founder and CEO Grant Cardone said the Miami River Bitcoin Fund, which is the firm's fourth blended investment vehicle mixing BTC and commercial multifamily real estate, will convert a portion of its monthly cash flows to BTC.

The CEO also told Cointelegraph that the long-term goal of Cardone Capital is to accumulate $1 billion of real estate and $200 million in BTC, which will be held as a treasury asset, across the hybrid funds. — Cointelegraph report

If you read the linked report, the strategy is clear, move a percentage of cash flows into bitcoin and experience better growth on incomes value invested.

The business world is taking on a new shape thanks to Bitcoin's track record. Investment in decentralized economies will become a default strategy with most traditional businesses.

Some of the key reasons this makes sense is that unlike traditional investments, which these companies can easily direct their capital to, decentralized economies are backed by a network of diverse participants and growth is the focus of most roadmaps.

Scaling up every step of the day means that invested capital stays on a price appreciation trend with zero risks of centralized sabotage.

Digital assets treasuries will be a strategy most companies will adopt over the next couple decades.

Posted Using INLEO