Fidelity global asset allocation director directly compared Bitcoin to gold, concluding the digital asset will over time take a bigger market share from gold.
The director of global Macro Fidelity global asset allocation has in a note to investors discussed Bitcoin investment. Fidelity Investments began exploring cryptocurrencies through Fidelity’s Blockchain Incubator in 2013. The financial service provider has over $1.7 trillion assets managed. But not until late 2018 did it launch its first crypto business. This was a crypto arm Fidelity Digital Assets (FDAS). This arm has been spearheading its crypto business both in the US and Europe.
Its bullish outlook seems to be spreading across the investment firm. A note to investors by the head of the global macro Jurrien Timmer has dived into Bitcoin, further comparing it to gold. Having spent the last 25 years at the investment firm and a specialist in tactical asset allocation, Timmer’s note caries much weight.
In his note, the director points out “In my view, bitcoin has gone mainstream.” He also says that Bitcoin is growing as a legitimate hedge against inflation. Furthermore, it is becoming a stable store of value. And despite its “digital gold” narrative, it is valued more than gold in the current monetary environment.
“With interest rates close to zero – or negative – and central banks printing money like there’s no tomorrow, is it any wonder that bitcoin seems to be having its day?”
Fidelity: Bitcoin Favored to Gold
In comparison to gold, the strategist believes Bitcoin has an edge. Bitcoin’s supply is fixed and demand continues to grow. Bitcoin’s supply is finite and is being cut by half every four years. Gold, on the other hand, has had a stable supply for years and there is no finite supply. In addition, gold demand has been stable while Bitcoin’s demand has grown exponentially in the last few years.
The strategist points out that there are risks with Bitcoin. Chief among is volatility. He notes that this means it might not be a prudent investment for all. But for many investors, it will make up part of their portfolios. Regulation, competition from other cryptos and the emergence of CBDCs, and technicality are some of the other concerns.
Timmer in his conclusion predicts that Bitcoin will continue to take more market share from gold. His prediction is supported by a report released by Bitflyer earlier this year. Their research showed that Bitcoin has overtaken gold as the fourth most popular investment asset.
It is also key to note that Timmer’s comments on Bitcoin going mainstream and finding its way in most portfolios has been evident. There are reports that Kevin O’Leary has invested in Bitcoin. Despite his earlier criticism of the crypto market, the Tv personality said in an interview that he was investing 3% of his portfolio in BTC and ETH.