For many professionals involved in the traditional financial system, it’s been tempting to just ignore Bitcoin and hope it goes away. To them the digital currency makes no sense as an investment or a currency; they note it’s not backed up by any asset, underlying business, or government. Some call Bitcoin a digital tulip, a reference to the surge and eventual crash of flower-bulb prices in the Netherlands in the 17th century.

That posture has gotten increasingly hard to maintain, however. Set aside what you think of the case for Bitcoin. The point is that it’s here, and it’s worth in the neighborhood of $50,000 a coin, up from $4,900 last spring. On Wall Street, nothing commands attention like an asset your rivals made money on when you didn’t. And even if you did try to avoid it, Bitcoin has begun digging its way into portfolios, often indirectly.

Elon Musk, co-founder of Tesla Inc. and the world’s richest man, has long been a cheerleader for cryptocurrencies. On Feb. 8, Tesla revealed it had purchased $1.5 billion in Bitcoin to hold on its balance sheet. (The company also plans to accept it as payment for its electric cars.) That’s just a fraction of its $19.4 billion in cash and an even smaller part of the company’s market value of about $750 billion. But it still makes Tesla—a constituent of the S&P 500 and a top holding of many index funds—a little bit of a bet on Bitcoin.

Tesla isn’t the first to put some of the cash on its balance sheet into cryptocurrency. Software maker MicroStrategy Inc. did so last year to the tune of over $1 billion, more than a third of the company’s market value at the time the purchases were announced. It’s now doubled down, announcing plans to sell an additional $900 million of convertible bonds and use the proceeds to purchase even more of the cryptocurrency. Chief Executive Officer Michael Saylor explained the purchases last year by arguing that the Federal Reserve’s stimulative policies are degrading the value of the dollar, making cash on its balance sheet seem to him like a “melting ice cube” compared with the limited supply of Bitcoin. Predictably, MicroStrategy’s stock now often moves in response to Bitcoin prices, which is a little weird for a company previously known for cloud computing and business intelligence software.

Many corporate treasurers and chief financial officers are unlikely to follow Musk’s and Saylor’s lead. Bitcoin is prone to sudden plunges, often on the weekends when few are paying attention. The average CFO isn’t interested in waking up to a double-digit selloff in an asset that’s supposed to be part of the company’s cash cushion. Shareholders might start to wonder, if the company can think of nothing better to do with the money than bet on crypto, why it doesn’t just pay them a dividend or buy back some stock.

Still, these public companies’ embrace of Bitcoin seems to signal an important shift in sentiment. Consider the change in tune that’s occurred at JPMorgan Chase & Co. over the years. In 2017, when Bitcoin was trading for less than $4,600, CEO Jamie Dimon said he’d fire anyone at his bank “stupid” enough to trade the cryptocurrency. But life comes at you fast. This month, co-President Daniel Pinto said on CNBC the bank will trade Bitcoin if client demand gets strong enough, and he’s certain it will.

While it’s baby steps for now, crypto is clearly becoming more than a sideshow within finance and corporate America. And that has potentially big implications. Cryptocurrencies once served as sort of a pressure valve for investors’ speculative impulses. If the steam inflated a bubble, at least it was a quarantined bubble that posed very little risk to the rest of the system and economy—as opposed to, say, how the housing bubble triggered the global financial crisis.

One of the traditional selling points of Bitcoin has been its reputation as an uncorrelated asset—in other words, an investment that won’t take it on the chin when the stock market tanks, because it’s so detached from the fate of corporate America and Wall Street. That notion looked a little dubious when the value of Bitcoin sank more than 50% during the pandemic-triggered bear market in stocks in 2020. And it still seems dubious as Bitcoin has spiked in recent months, along with the more speculative and euphoric corners of the equity market.

The more Bitcoin lands on corporate balance sheets, and the more it’s seen as part of the same bucket of tech investments that have been driving the stock market, the less it will look like any kind of a hedge or an isolated asset class. That means the link between the two could grow stronger and could mean turbulence in Bitcoin will lead to (or at least coincide with) turbulence in the stock market. Currently, Bitcoin’s realized volatility—a measure of how big its price swings are—is almost five times that of the S&P 500 over the past 20 sessions. It’s almost twice as volatile as Tesla itself, a stock that’s famous for its wild price movements.

Perhaps the embrace of Bitcoin by corporations and Wall Street will help the cryptocurrency mature and calm its price swings. Or perhaps not, considering crypto is still an investment beloved by scammers and hackers. Never mind the millions of dollars of digital wealth lost because of forgotten passwords or missing hard drives.

And that’s before we even get to Dogecoin, another cryptocurrency Musk has touted lately. Named after a dog meme popular on social media, it’s widely considered a joke. Probably the best thing Dogecoin has going for it is a viral jingle on TikTok about “taking Dogecoin to the moon.” The earworm does offer some food for thought: “You may have studied the economy for seven years in college, but no one guessed that Bitcoin would be $30,000. So basically anything can happen at this point.”

True. And it’s about $50,000 now. Wait, make that $51,000….

To contact the author of this story:
Michael P. Regan in New York at mregan12@bloomberg.net

To contact the editor responsible for this story:
Pat Regnier at pregnier3@bloomberg.net
James Ellis