As bitcoin treasury adoption grows, analysts say smaller-cap companies would be better served to follow MicroStrategy's lead

Business intelligence company MicroStrategy has been buying and holding bitcoin on its balance sheet for years, amassing $37 billion worth of BTC at publication time.

"Ultimately, I think the right way to think of it is, it's always going to be the stronger capital asset versus a conventional SP index," cofounder and executive chairman Michael Saylor recently told CNBC .

The accumulation has helped balloon MicroStratey’s stock price (ticker MSTR) to record highs and an $85 billion market cap. Saylor is also trying to get other companies to follow MicroStrategy's lead.

"Putting bitcoin on the balance sheet was once a reality for only the crypto-native; it’s now going mainstream on the back of a promising post-election outlook," Nathan McCauley, CEO and co-founder of Anchorage Digital, told The Block in an email. "With the floodgates starting to open, expect more and more publicly traded names to put excess treasury cash to work by looking toward bitcoin as a reserve asset."

Can other companies match MicroStrategy, or is everybody just playing catch-up?

"I would say that Saylor's success is making a BTC treasury strategy more acceptable for other pubco's and I suspect more will emerge in the near future," Two Prime Digital Assets CEO Alexander Blume told The Block. "There's a reward for being early to this."

Tech giant Microsoft is including an "assessment in investing in bitcoin" as a shareholder voting item on the agenda for its annual meeting on Dec. 10. Saylor offered to meet privately with Microsoft CEO Satya Nadella to discuss adopting bitcoin but was rebuffed, so now he’s sending a three-minute proposal to the board.

If the company were to make such a move, it would make Microsft ($3 trillion market cap) the largest company by market cap to hold bitcoin. The largest public corporate holder is Tesla ($1 trillion market cap), which owns 11,509 bitcoin .

"To be clear. This is interesting but my view is: its highly unlikely $MSFT does it," Bloomberg Intelligence ETF analyst James Seyffart said on X . "But then again if you told me a year ago that there'd be legitimate conversations happening in parts of the US gov about a strategic bitcoin reserve in 2024... I'd have probably laughed at you."

The mega-cap tech companies have plenty of free cash to deploy in bitcoin, but given the dominance of their respective core businesses, Bitcoin will likely be a non-material part of their strategy, according to analysts at Bernstein, who noted these mega-caps' core businesses continue to require future growth capex, and bitcoin would be a digression.

“However, smaller companies with surplus cash and weakening core business, could follow the MSTR model,” Bernstein analysts wrote in a note to clients. “Larger tech companies would not scale Bitcoin due to core business dominance and smaller companies are starting new in capital markets, unlike MSTR with a 4-year track record, including surviving a brutal bear market in 2022/23 and making the most of it.”

This may be why lesser-known companies such as Metaplanet and Semler Scientific have started accumulating BTC this year. This week, the video-sharing platform Rumble announced a Bitcoin allocation strategy that will include purchases of up to $20 million.

"Michael Saylor is essentially a Bitcoin evangelist, and his recent presentation to Microsoft's board will be fascinating to watch," Louis Sykes, a crypto analyst with All-Star Charts, told The Block. "I expect measured, strategic exploration from other large caps – not wholesale adoption."