A new report by US asset manager Fidelity is remarkably optimistic about Bitcoin (BTC) and the rest of the crypto space. In the future, the interest of institutional investors is expected to increase the Bitcoin market capitalization by hundreds of billions of dollars. Is Bitcoin Massively Undervalued?
After MicroStrategy and Square recently announced investments in Bitcoin, one of the world’s largest asset managers has now spoken out.
Fidelity Digital Assets, publishes a report entitled “ Bitcoin Investment Thesi.” In this report, Fidelity explains how portfolio managers increase their income by holding Bitcoin.
Fidelity analyzes the Bitcoin network using a variety of fundamental data. Also, several sample portfolios illustrate the performance benefits of a diversified portfolio that includes BTC.
In particular, the generation change and the new type of media consumption apply loudly Fidelity as a driving force for the future growth of digital assets:
Financial media and the way people consume investment information are changing. This takes place against the background of a massive generational wealth transfer. Bitcoin has the potential to be the first asset to capitalize on these developments.
The acceptance of Bitcoin and other cryptocurrencies can be compared to the acceptance of stocks from emerging markets in the late 1980s.
Similar to the crypto space today, there were concerns about volatility and liquidity back then. Nevertheless, over time, many investors recognized the potential of the emerging markets and invested early.
Today, investments in emerging market stocks comprise 11 percent of the global stock market — tremendous growth. Can the Bitcoin course also benefit from institutional investments in the coming years?
Cathie Wood, Deputy Director at Fidelity holds it is possible that Bitcoin will take a path similar to that of emerging stock markets.
Myopia was prevalent in the United States. Investing in emerging markets was discouraged. Bitcoin today can therefore be compared with the situation back then.
The involvement of traditional institutions in Bitcoin is at the highest level ever.
In addition, crypto YouTuber Quinten Francois commented on the trend and illustrated the development in an interesting graphic from Coin98 Analytics .
Not only did Square and MicroStrategy invest in BTC in 2020; in total, more than ten public companies now hold BTC worth more than seven billion US dollars. Furthermore, Grayscale alone holds more than 2.6 percent of the total amount of Bitcoin in circulation.
Fidelity believes that steadily declining bond yields and the expansive monetary policies of central banks are driving more wealth managers worldwide to alternative investments like Bitcoin.
In a most optimistic forecast of the Fidelity Report Bitcoin’s market capitalization could rise to as much as two trillion dollars.
Additionally, assets like cryptocurrencies that are negatively correlated or have low correlations with the rest of the global marketplace offer portfolio managers tremendous asset management advantages.
Disclaimer: These lines are not a substitute for investment advice, investments in the crypto market are made at your own risk. Invest only as much as you are willing to lose. I get commissions for purchases made through links in this post.