After the implosion of the Silicon Valley bank, the price of bitcoin skyrocketed and companies around the world reclassified their finances as a result.
Billionaire venture capitalist Tim Draper has published a list of recommendations for companies in the new macro climate, in which he recommends companies keep a portion of cash in Bitcoin to cover payroll.
Tim Draper tells companies to keep their payroll in bitcoin
Things got complicated very quickly for Silicon Valley’s business clients. Suddenly the big tech companies with millions and billions of dollars in banks are worried about their deposits.
It caused a mad rush to diversify or move into bigger, safer banks, and a huge rally in bitcoin from $20,000 to $28,000 in two weeks. Companies feel insecure about their money in an unfamiliar way, which leads to uncertainty.
Billionaire investor Tim Draper has We shared some strategies He recommends that this may allow companies to better position themselves amid the ongoing problems in the banking sector.
Among them, keeping “at least 6 months of short-term cash” split across a local and regional bank, and “at least a payroll worth of cash in bitcoin and other cryptocurrencies.”
Draper's target for BTC | BTCUSD on TradingView.com
Will companies move cash into cryptocurrency?
The idea behind the cryptocurrency recommendation is that even if a company does not have access to its funds from a banking institution, it will at least be able to cover the payroll for two payroll cycles.
This is especially important for technology companies in the Silicon Valley area, Company CEOs and other California officials can be held personally liable for unpaid wages.
Payroll costs can be significant and require access to liquid funds. For example, Google in 2022 had more than 190,000 employees, with an average salary of $133,000 per year according to the data. Assuming no difference in these numbers, two weeks’ payroll would be $971 million, while two months’ payroll would be $4.12 billion.
Many employees get paid every two weeks, which would be at least $1.9 billion per pay cycle. And this is just one large-scale technology company. If companies actually listen to Draper, the amount of money that could flow into Bitcoin and cryptocurrencies is incredible.
Why don’t they listen? Draper is a venture capitalist who has made winning bets on Coinbase, Twitch, Tesla, Twitter, and Robinhood. Could this be the reason why Draper predicted Bitcoin would cross $250,000 per coin?