Fidelity Digital Assets, subsidiary of multi-trillion dollar investment firm Fidelity Investments, views Bitcoin (BTC) as an “aspirational store of value” and an “insurance policy” against a troubled financial system according to a new report.
Fidelity holds over $8 trillion in assets and its digital assets arm launched in October 2018.
Bitcoin is an “aspirational store of value”
The report, Bitcoin Investment Thesis: An Aspirational Store of Value, notes that Bitcoin meets the basic test for being considered a store of value but hasn’t achieved that status yet:
“Many investors consider Bitcoin to be an aspirational store of value in that it has the properties of a store of value but has yet to be widely accepted as such.”
The core components which drive its potential as a store of value lie in the “decentralized settlement network and its digitally scarce native asset”. Bitcoin’s volatility, often used in counter arguments against Bitcoin being a store of value, can be considered beneficial to adoption as it “attracts attention, development and innovation” the report says.
According to John Pfeffer of Pfeffer Capital LP, who is quoted in the report: “Most people in the world don’t yet see Bitcoin as digital gold. As soon as people see it in a different way, the price will adjust”.
Bitcoin is an “insurance policy”
The report also makes reference to the concerns around money printing as a result of the COVID-19 financial crisis and suggests that some are losing trust in traditional economies:
“The unknown consequences of record low interest rates, unprecedented levels of global monetary and fiscal stimulus and deglobalization are all adding fuel to the fire of awareness and adoption.”
John Vincent of Wakem Capital Management made reference to money printing in light of the recent Bitcoin block reward halving. “You don’t need to be a PhD to understand that the number of dollars just doubled whereas the BTC supply just halved,” he said.
Another catalyst for adoption the report notes is the transfer of wealth from the older generation to a younger demographic as “younger people view Bitcoin more favourably”.