How Much Cryptocurrency Should Your Company Hold In Reserve?
After all, the volatility of these currencies is no secret, and it’s pushing many companies towards third-party payment processes that seamlessly transfer crypto into cash before it even gets on those business books. But what if you do decide to bring cryptocurrency onboard? You could ultimately end up making more money by doing so, but losses could also increase if you keep too much cryptocurrency in your treasury.
So, how much cryptocurrency should you actually keep in reserve? Here’s how you can work it out.
# 1 – Factor for Company Size
There’s no one answer for how much cryptocurrency you should keep in reserve, because every business is different. Many of those differences rest in company size, as this has a huge impact on your risk tolerance. For small companies with slim margins and low cash reserves, it’s actually best to hold no cryptocurrency onsite at all.
By comparison, large, profitable businesses can retain a far larger crypto treasury, which could lead to notable profits. However, experts do warn against giving more than 10% of your treasury over to cryptocurrency, and then only if you’re actively working towards growth. As a rule of thumb, most experts advise against exceeding 3%-5%.
# 2 – Consider the Currency in Question
Your decision should also rest on which cryptocurrency you’re dealing with. For instance, as last year showed, holding large amounts of a volatile coin like Bitcoin can lead to notable and immediate losses. Hence, if you’re accepting Bitcoin, you’re probably best off either letting a processor exchange it for you or immediately investing with the help of crypto market makers who can reduce volatility and guide you towards the best trades.
Alternatively, keeping stablecoins like USDT in reserve comes with a generally lower risk, and so may be better if you’re dealing in large amounts, which you could then either invest or hold for a future date.
# 3 – Know Your Purpose
It also helps to know your purpose in keeping cryptocurrencies. For instance, are you simply hoping to keep your operations moving with a lucrative store of cryptocurrency on hand? Or, are you trying to attract investors? You may also hold cryptocurrency as a brand marker that highlights you as a cutting-edge company worth attention.
In either instance, determining your purpose will help you to know how much cryptocurrency you should aim to keep. For instance, if you’re driven by brand recognition, you should store smaller amounts than if you were seeking investors, and so on. Keep your plan in mind, determine how much cryptocurrency you need to make it happen, and be careful not to exceed that amount.
Cryptocurrency business reserves may bring risks, but they can also bring major benefits. Simply make sure your business stays on the right side of that line by determining the ideal crypto treasury amounts using these tips.
