Fidelity expects more sovereign nation-states or a central bank to acquire Bitcoin this year.
Wall Street giant Fidelity Digital Assets believes several central banks and more countries could follow El Salvador and Tesla into acquiring Bitcoin this year. The firm believes that buying Bitcoin while the price is low would be better off competitively than their peers. The price of Bitcoin reached the all-time high of $69,000 in November 2021 but has since lost close to 40% of that value by rolling back to around $42,000 and wiping $1 trillion from the combined crypto market.
Fidelity Digital Assets, a subsidiary of Fidelity Investments, asserted in their report on crypto trends and their future impact earlier this month. The report discussed a myriad of trends, including the adoption of cryptocurrencies by sovereign countries. The report mentions countries like China that have banned cryptocurrencies, and El Salvador took the opposite approach by making Bitcoin legal tender.
A hedge compared to a potentially much larger cost
The Fidelity report dubbed “Research Round-Up: 2021 Trends and Their Potential Future Impact” report considered that Fidelity is a multinational financial services corporation. It doesn’t get more mainstream than this. The report’s authors said, “We think the two developments observed this year couldn’t be more opposed. Time will certainly tell which path is more successful,” the report authors opined. However, they noted:
“We also think there is very high stakes game theory at play here, whereby if Bitcoin adoption increases, the countries that secure some Bitcoin today will be better off competitively than their peers […] therefore, even if other countries do not believe in the investment thesis or adoption of Bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.”
According to the report, it would make sense to get some BTC if it catches on. Stacy Hebert opined via Twitter that the “first-mover advantage goes to El Salvador.” The report said other countries might be accumulating Bitcoin on the down-low. For example, Venezuela seized a lot of ASICs from private miners. Chances are those are active in a warehouse somewhere. And, of course, there are rumors that the USA is already mining.
Institutional investors surveyed intend to allocate to digital assets in the future
In general, Fidelity thinks that investment in digital assets will keep growing. The report said something needed to happen to catalyze widespread institutional adoption. The report’s authors said:
“Allocating to digital assets has become far more normalized over the past two years for all investors. The Fidelity Digital Assets 2021 Institutional Investor Survey found that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future […]. This number has grown across each survey region for the past three years. We expect 2022 to show another year of higher current and future asset allocations to digital assets amongst institutions.”
Tom is a freelance writer with over 10-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. As a philosophical figurehead, he believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.