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The report by Fidelity depicts that Bitcoin has major fundamentals that put it further from health and economic adverse effects.
Fidelity Digital Assets, a firm focused on researching institutional asset investment, has released a report on the role of Bitcoin as an uncorrelated alternative investment that may provide portfolio optimization benefits.
Fidelity Report on Bitcoin
According to the report, which is the second report in its Bitcoin Investment Thesis series by @riabhutoria, there is a huge potential in the crypto industry especially with Bitcoin for institutional investors. The report by Fidelity noted that Bitcoin has managed to decouple from other investment assets like gold, stocks and other precious metals.
“Bitcoin’s correlation to other assets from January 2015 to September 2020 (displayed in the table below) is an average of 0.11, indicating there is almost no relationship between the returns of bitcoin and other assets,” the report indicated.
Bitcoin has mostly gained institutional investors confidence during the height of the pandemic when the stock market and most global economies came to their knees. Bitcoin together with other cryptocurrencies on the other hand were able to stabilize despite the increased volatility and have managed to climb significantly year to date.
The report by Fidelity depicts that Bitcoin has major fundamentals that put it further from health and economic adverse effects. “Bitcoin has distinct underlying fundamentals that are not affected by the health and economic situation created by COVID-19,” the report stated.
The report also indicated that Bitcoin has gained favor among investors as its success is not predicted on a single purpose. Whereby, the asset can be used as a store of value and a means of exchange.
On the Flipside
Indeed, Bitcoin and other digital assets whose inflation rate is known and fixed are set to largely benefit from the increased global monetary stimulus meant to kickstart the global economy from the coronavirus pandemic.
As governments print more money to solve the economic hardships, Bitcoin and other cryptocurrencies remain under controlled measures. Hereby, Bitcoin’s value is poised to skyrocket in the near future as more institutional investors flock into the industry.
According to metrics provided by CoinGecko, Bitcoin was trading around $11,404.02, having added approximately 37.6 in the past one year. Additionally, the asset was up 10.4%, 5.2% and 7.5% in the past 30 days, two weeks and seven days respectively through Tuesday.
Notably, Bitcoin had a market capitalization of around $211,166,894,135 with its daily trading volume at $19,333,804,475. Having survived a significant portion of the pandemic without failure, institutional investors feel confident in raising their portfolio stake in Bitcoin.