fidelity digital assets

Fidelity: 60% of Institutional Investors Believe that Digital Assets Have a Place in their Portfolio

Fidelity Digital Assets surveyed 774 institutional investors across the United States and Europe, and 80 percent of those who were surveyed found something appealing about digital assets.

The research was conducted from November 2019 to early March 2020 and is the second consecutive year that Fidelity Digital Assets has conducted this survey for US institutional investors and the first for European investors.

60 percent of the institutional investors surveyed believe that digital assets have a place in their investment portfolio.

Over a quarter of institutional investors surveyed by Fidelity Digital Assets are holding Bitcoin, while 11 percent have exposure to Ethereum.

36 percent of respondents, including 27 percent from the US and 45 percent from Europe say that they are currently investing in digital assets.

91 percent of respondents who are open to exposure to cryptocurrencies in a portfolio expect to have at least 0.5 percent of their portfolio allocated to digital assets. Investors in the US has seen a 9 percent increase this year (88%) compared to 79% in 2019.

Tom Jessop, the president of Fidelity Digital Assets commented, “These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class. This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions.”

The trend of cryptocurrency and digital asset adoption is expected to increase next year.

The Great Monetary Inflation

Billionaire hedge fund manager Paul Tudor Jones was reportedly looking to buy Bitcoin to hedge against inflation as central banks across the world are printing money to relieve economies affected by the coronavirus pandemic.

Jones is one of Wall Street’s most seasoned and successful hedge fund managers, CEO and founder of Tudor Investment Corp, a hedge fund that managed $8.4 billion assets under management as of March 30, based on data from the Securities and Exchange Commission.

Jones compared Bitcoin to gold by saying that the digital currency reminds him of the role that gold played in the 1970s. Jones was well known for his correct prediction of the 1987 market crash and shorted Japanese equities several years later before Japan’s economy crashed.

Jones said in an investor letter, called The Great Monetary Inflation, “The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.”

Bitcoin’s Scarcity Feature Makes the Crypto an Aspirational Store of Value for Investors, says Fidelity Digital Assets

Fidelity Digital Assets, the crypto arm of investment firm Fidelity Investments found in its new report that many investors consider Bitcoin to be an “aspirational store of value”. The firm believes that the largest cryptocurrency has the properties of a store of value but has yet to be widely adopted.

Fidelity Digital Assets was launched in 2018 and has since set up Bitcoin custody and trading services for institutional clients.

In Fidelity’s most recent report, scarcity was mentioned as one of the key characteristics in reference to a good store of value for protecting against the depreciation of value in the longer term. With Bitcoin’s finite supply, it makes the cryptocurrency an aspirational store of value.

Low interest rates and global monetary and fiscal stimulus may have fueled the rate of awareness and adoption of cryptocurrencies. The United States recently offered its second stimulus check for COVID-19 economic relief. Treasury Secretary Steven Mnuchin has announced that the second stimulus payment is set to be administered in August.

With the excess money printing due to stimulus checks being paid out by US government, Gemini CEO Tyler Winklevoss advocated in a recent public tweet that Bitcoin is the way to go, and should definitely be invested in. He explained that with the US Federal Reserve’s plan of mass printing money, the “stage for Bitcoin’s next bull run is set.”

Fidelity argued that Bitcoin’s most novel innovations its unforgeable digital scarcity:

“Investors believe this property is foundational in understanding and appreciating Bitcoin. Before Bitcoin, multiple investors made important contributions in the quest to achieve digital scarcity, but were unsuccessful in enforcing it.”

60% of institutional investors said they could invest in crypto

Fidelity Digital Assets surveyed 774 institutional investors across the United States and Europe, and 80 percent of those who were surveyed found something appealing about digital assets.

60 percent of the institutional investors surveyed believe that digital assets have a place in their investment portfolio.

Over a quarter of institutional investors surveyed by Fidelity Digital Assets are holding Bitcoin, while 11 percent have exposure to Ethereum.

36 percent of respondents, including 27 percent from the US and 45 percent from Europe say that they are currently investing in digital assets.

Why Bitcoin Should Make Up 5% of Your Investment Portfolio, According to Fidelity

Bitcoin has behaved unlike any other investment asset on the market and its stellar performance so far is only indicative of something greater. According to Fidelity cryptocurrency experts, Bitcoin (BTC) has not unleashed its full potential yet, and investors should capitalize on its current growth and consider diversifying their investment portfolio with BTC.

Bitcoin’s budding potential among all cryptos

Research from Fidelity’s Digital Assets sub-division demonstrates Bitcoin’s movement on the market is unlike any other assets such as gold or stocks. The mainstream cryptocurrency has experienced great gains, with Bitcoin being the biggest digital currency by market capitalization. In reference to BTC’s potential, Director of Research for Fidelity Digital Assets, Ria Bhutoria said:

“Bitcoin has a $197 billion market cap (as of October 7,2020). Bitcoin is a drop in the bucket compared with markets bitcoin could disrupt.”

Fidelity makes the case for Bitcoin investment

Through its Bitcoin Investment Thesis report, Fidelity Digital Assets found that Bitcoin had a low correlation with other digital assets as well. As Bitcoin (BTC)’s movement was decoupled from that of other hedges, financial services giant Fidelity suggested that it was a wise choice for investors to consider allocating 5% of their investment portfolio to Bitcoin.

The report from Fidelity demonstrated that not only was Bitcoin’s behavior decoupled from that of other assets on the market, such as stocks and gold, but that the cryptocurrency appeared to be unaffected by external social and economic conditions, having experienced surges despite “economic headwinds.”

This in itself made the case for why Bitcoin was an attractive alternative investment, according to Fidelity. Director of research Ria Bhutoria stated:

“Bitcoin is fundamentally less exposed to the prolonged economic headwinds that other assets will likely face in the next months and years. Combined with its multifaceted narratives and an interesting effect of persisting retail and growing institutional sentiment, it could be a potentially useful and uncorrelated addition to an investor’s portfolio toolkit.”

In addition to this, Fidelity Digital Assets elaborated on Bitcoin’s other advantages, which included liquidity, accessibility, and low fees. As most alternative investment packages came with a commission fee pocketed by financial portfolio managers, monetary gains acquired by investors may sometimes be lower than what was earned. The report read:

“Alternative investments may be accompanied by fees that reduce the net returns investors receive, such as management and performance fees.”

The only transaction fees associated with Bitcoin was the actual cost of the crypto trade, as well as “the cost to custody the assets,” making it a great alternative for investors wishing to diversify their financial portfolio.

Fidelity supporting Bitcoin comes at a time when numerous institutional investors have diversified their companies’ treasury reserve with Bitcoin. Recently, Square payments company bought $50 million in BTC, and this made pave the way for other investors looking to onboard the crypto asset.

Winklevoss says Bitcoin price to hit $500,000

Fidelity’s sentiments also echo that of Bitcoin billionaire, Tyler Winklevoss, who has long touted Bitcoin’s horn. He asserted that Bitcoin was headed towards a mark-up of $500,000.

For Winklevoss, the “digital gold” cryptocurrency was the only protection against inflation. With the US Federal Reserve’s stimulus package plans and the reserve bank actively printing money, the US dollar has greatly depreciated, consequently leading to investors flocking towards Bitcoin as a safe-haven asset. With Bitcoin’s maximum supply capping at 21 million, Winklevoss said:

“Bitcoin is ultimately the only long-term protection against inflation.”

The mainstream cryptocurrency has recorded bullish momentum this week. Currently, as of press time, Bitcoin is trading at $11,438.85 on CoinGecko.

Fidelity Digital Assets to Hire 70% Staffs to Meet Rising Cryptocurrency Demand

Fidelity Digital Assets, a subsidiary of Fidelity Investment Inc., has announced plans to expand the number of its staff so that to meet the rising demands for crypto services from institutional investors, according to a Bloomberg report.

The subsidiary intends to hire about 100 employees in technology and operations across Salt Lake City, Boston, and Dublin. Tim Jessop, the president of Fidelity Digital assets, said that the employees would assist in developing new products and expanding into other crypto assets apart from Bitcoin.

Fidelity Digital Assets was established in 2018, and since the firm has been providing custody, trading, and other services for Bitcoin.

In 2020, the year “was a real breakthrough year for space, given the interest in Bitcoin that accelerated when the pandemic started,” Jessop stated.

Unlike most financial markets, which close in the afternoons and on weekends, Fidelity Digital Assets plans to provide cryptocurrency trading throughout most of the weeks. Jessop said that firm intends to be a place where the trading of crypto assets is full-time for most of the weeks.

Jessop acknowledged that the demand from institutional investors to get access to Bitcoin, Ether, and other virtual currencies is increasing. He stated that Fidelity Digital Assets has witnessed using interest in Ethereum cryptocurrency, so it wants to be ahead of that demand.

“Bitcoin has been the entry for a lot of institutions. It’s now really opening up a window on what else is going on in the space. A big shift is in “the diversity of interest” from new and existing customers,” Jessop said.

He disclosed that the first clients for Fidelity Digital Assets appear to be hedge funds and family offices. The number of corporations and retirement advisers seems to expand, who seek to hold crypto tokens as an asset class.

Why More Mainstream Acceptance?

After years of hesitation and resistance to adopt crypto assets, it appears that the floodgates are eventually opening, like retail outlets, credit card firms, banks, and even vehicle manufacturers are making major shifts.

With major endorsements from Silicon Valley billionaires such as Jack Dorsey and Elon Musk, Bitcoin price rose to $65,000 this year, with some speculating that it could hit $100,000 by 2022.

Major companies such as credit card giant Mastercard, Apple Inc, Tesla, and others have moved into the sector. Despite Bitcoin declined its value and currently trading at $33,226 due to regulatory concerns, firms continue to accept the cryptocurrency for transactions or invest heavily into it with corporate finance itself.

This year began with a rush by institutional and retail investors searching for dollar alternatives and high-yielding assets amid rock-bottom or even negative interest rates globally.

Fidelity Study Shows 70% Institutional Investors Eyeing for the Crypto Market

Despite institutional investment in the crypto market evaporating, a study conducted by Fidelity Digital Assets found out that 70% of institutional investors are still eyeing this field in the future.

Price volatility is considered as the biggest stumbling block to new entrants, followed by the lack of fundamentals needed to assess value and concerns around market manipulation, according to Reuters, citing the Fidelity study.

Yet, price volatility is not new to the crypto market, as evidenced by the fact that Bitcoin (BTC) shed off more than 30% of its value in a single day to hit lows of $30K on May 19 from an all-time high (ATH) price of $64.8K recorded in mid-April.

It, therefore, shows that new institutional investors in the crypto space are keeping fingers crossed to see how price volatility transpires. Meanwhile, around 90% are eyeing crypto investment in the next five years.

The study noted:

“Around 90% of those interested in investing in the future said they expected their company’s or their clients’ portfolios to include digital asset investments within the next five years.”

Additionally, more than half of the 1,100 institutional investors surveyed between December and April disclosed that they own crypto investments. Those interviewed included digital and traditional hedge funds, high net worth investors, financial advisors and endowments, and family offices.

Market analyst Lark Davis recently stated that the amount invested by institutions and corporates in the BTC market was a small per cent of their total cash reserve. He noted that publicly traded companies had around 10 trillion in cash reserves, of which nearly 6 billion had been invested in Bitcoin. Therefore, out of the 41,000 publicly traded companies, less than two dozen had taken positions in BTC.

Fidelity Reiterates Bitcoin's Unique Value as a Primary Investment Choice

Identifying assets with enduring value remains a pivotal concern for investors. Recently, Fidelity Digital Assets shed light on the distinct stature Bitcoin holds among digital assets, endorsing it as a primary consideration for investors. This narrative was further propagated by MicroStrategy’s Founder and Chairman, Michael Saylor, who shared Fidelity’s insights on Twitter on October 10, 2023, garnering over 300K views.

Bitcoin’s Distinguished Attributes Unveiled

A research study issued on October 4, 2023, by Chris Kuiper and Jack Neureuter under the banner of Fidelity Digital Assets, revisited the intrinsic characteristics that set Bitcoin apart from other digital assets. Titled “Bitcoin First Revisited: Why investors need to consider bitcoin separately from other digital assets,” the study builds on an initial analysis from January 2022. Over the span of a year and a half, Bitcoin has not only sustained its unique attributes but has witnessed an upward trajectory in adoption and market share, even as other digital assets encountered headwinds.

Positioning Bitcoin as a Monetary Good

The crux of the study hinged on recognizing Bitcoin as a monetary good, distinctly different from other digital assets due to its secure, decentralized nature, and sound digital money qualities. The authors assert that the prospect of any digital asset surpassing Bitcoin in these aspects is slim, as any such “improvement” would entail trade-offs. They propose that Bitcoin should be the introductory route for traditional allocators looking to delve into the digital asset space, emphasizing the need for separate evaluation frameworks for Bitcoin and other digital assets.

Fidelity’s Expanding Footprint in Bitcoin and ETF

Fidelity has been extending its stride into the Bitcoin realm through ETFs and other products, embodying its acknowledgment of Bitcoin’s unique value proposition. As of October 2023, Fidelity Investments offers a compact selection of 58 ETFs in the U.S., some of which provide exposure to the digital asset market, including Bitcoin. These offerings are a testament to Fidelity’s growing commitment to providing diversified investment avenues in the digital asset spectrum. The total assets under Fidelity’s ETFs amount to $36.24 billion as of October 7, 2023, showcasing the substantial footprint Fidelity has in the ETF domain.

Unpacking the Implications for Investors

Fidelity’s publication elucidates that the thriving nature of Bitcoin doesn’t spell doom for other digital assets; the broader digital asset ecosystem can cater to diverse needs and problem-solving avenues that Bitcoin doesn’t address. Yet, when it comes to serving as a reliable store of value in an increasingly digital world, Bitcoin’s position remains unrivaled. The insights furnished by Fidelity Digital Assets are poised to equip investors with a nuanced perspective, underlining the imperative of distinguishing between Bitcoin and other digital assets when orchestrating investment strategies.

The study thus serves as a cornerstone for shaping informed investment decisions in the digital asset spectrum, reinforcing the unparalleled value proposition Bitcoin brings to the table.

EDX Markets is Expanding in Singapore

Cryptocurrency trading platform EDX Markets, backed by heavyweights like Citadel Securities and Fidelity Digital Assets, is broadening its horizon with a strategic expansion into Singapore. This move marks a significant step in EDX Markets’ growth trajectory, following a successful second funding round co-led by Pantera Capital and Sequoia Capital. Although the exact funding size remains undisclosed, the investment enthusiasm is evident as shares were purchased at double their initial 2022 value.

EDX Markets’ foray into Singapore is not just a geographic expansion; it’s a strategic diversification of its product offerings. The company plans to introduce spot and perpetual futures trading, catering to a wide array of investors and traders in the dynamic Asian financial hub. Singapore’s robust financial ecosystem and its open-arms approach to fintech innovation make it an ideal location for EDX Markets to diversify its product suite and tap into a rich pool of financial talent.

This expansion is underpinned by the launch of EDX Clearing, a cutting-edge, non-custodial clearing solution for digital asset trading. This feature significantly elevates EDX’s marketplace, offering a competitive edge by enabling a single net settlement process through EDXC. This innovation not only reduces credit risk but also streamlines the trading process, thereby attracting more institutional investors.

The company’s approach to custody is another aspect worth noting. In a market where custodial services are a hot topic, EDX Markets has chosen to partner with Anchorage Digital for custodial services, ensuring that users can trade without the need for pre-funding in fiat or cryptocurrency. This non-custodial model is a strategic move to mitigate the risks associated with fund co-mingling, making the platform more attractive to cautious institutional investors.

EDX Markets’ expansion into Singapore and its innovative product offerings are set against the backdrop of a recovering cryptocurrency market. The platform is poised to offer institutional investors a robust venue for trading major tokens like Bitcoin, Ether, and Litecoin, without the typical custodial concerns.