As uncertainty and risk skyrocket amid a global pandemic, investment firms need exposure to new assets to invest into, being more of a necessity to stay afloat. Fidelity, one of the largest brokers within the US, has chosen Bitcoin, and is praising it as an excellent investment for those either considering to exit the banks and enter the markets.
Bitcoin Described As Promising Asset
Fidelity Digital Assets, the crypto market-focused arm of Fidelity, gave out a report in October of 2020. This report, named “Bitcoin Investment Thesis: Bitcoin’s Role As An Alternative Investment,” takes to analyzing the role Bitcoin can play as an investment. Alongside this, the report analyzes what the world’s first cryptocurrency could bring to the table in the future.
The report made it clear that Fidelity is convinced that Bitcoin is a very promising asset, indeed, but only for those willing to take risks to do it.
Lack Of Correlation Key Benefit
Fidelity considers Bitcoin to hold significant advantages as opposed to traditional financial instruments. One of its key arguments for its strength, is how this cryptocurrency has a very low correlation with any other asset within an investment portfolio, standing on its own for the most part.
For an investor, this is excellent news, as they don’t need to worry of having it be dragged down by some other asset going down. Fidelity claims that Bitcoin can be classified as an alternative asset, allowing those that hold it to hedge their wealth through exposure to an asset that has its risk change when other assets fall in other markets.
Through this nature, Bitcoin can serve as a type of cushion when it comes to a diversified investment portfolio.
A Slow, Inevitable Mainstream Acceptance
As for details, Fidelity supports an investment strategy with up to 5% of your total portfolio being in Bitcoin. Further recommendations are that people should either buy or sell this, should their proportion either increase or decrease. This, in turn, allows investors to develop discipline, and further ensure that Bitcoin’s role as a wealth booster will be maintained.
The report itself has made a very bullish assessment for Bitcoin’s future, as well. As funding flows from traditional investments, Bitcoin could see its price boosted as it steadily flows into a mainstream investment, as opposed to being considered a niche market.
Another key thing to take into consideration, is how more institutional-grade investors are opting to get involved with Bitcoin as time goes on. Should more institutional players enter this market, the preconceived ideas about Bitcoin and its illegitimacy will slowly fade away, until it will be strange not to consider it mainstream.