Fidelity Digital Assets (a subsidiary of Fidelity Investments) suggests bitcoin can be considered portfolio insurance. The firm notes that the cryptocurrency “may soon stand in stark contrast to the path that the rest of the world and fiat currencies may take — namely the path of increased supply, additional currency creation, and central bank balance sheet expansion.”
Fidelity says Bitcoin could be portfolio insurance
Fidelity Digital Assets, a subsidiary of Fidelity Investments, recently published a research study titled “The Rising Dollar and Bitcoin.” The research outlines “how bitcoin could be considered portfolio insurance” as the rising dollar impacts global currency markets.
“The strengthening U.S. dollar is wreaking havoc among other countries and may put pressure on the Federal Reserve to soon reverse its tightening monetary actions, something that has precedent based on 1985’s Plaza Accord,” Fidelity explained.
In addition, “more monetary debasement may be needed to alleviate the high debt load among developed economies,” the report details, adding that “recent events in the United Kingdom have shown counterparty and liability risks in the system, making monetary intervention and doses of liquidity features that are not likely to go away any time soon.” The firm continued:
Comparatively, bitcoin remains one of the few assets that does not correspond to another person’s liability, has no counterparty risk, and has a supply schedule that cannot be changed.
“Therefore, bitcoin may soon stand in stark contrast to the path that the rest of the world and fiat currencies may take — namely the path of increased supply, additional currency creation, and central bank balance sheet expansion,” Fidelity clarified.
“While the U.S. dollar remains very strong relative to other fiat currencies, the reality of the U.S. financial system is that it is in a similar position as the U.K. in the long run,” Fidelity asserted, elaborating:
The country’s high level of debt to GDP makes it unlikely that they will be capable to manage higher real rates for an extended period of time, if they are to meet their current debt obligations.
Fidelity Digital Assets have been increasing their crypto services. October 28th will see the launch of ether (ETH), trading and custody. A new Ethereum index fund was also launched by the firm, in response to clients’ demand to have exposure beyond just bitcoin.
Fidelity: Do you support bitcoin portfolio insurance? Please let us know what you think in the comment section.
Images CreditsShutterstock. Pixabay. Wiki Commons
DisclaimerInformational: It does not constitute an offer, solicitation, or recommendation of any company, products or services. Bitcoin.com doesn’t offer investment, tax or legal advice. This article does not contain any information, products, or advice that can be used to cause or alleged result in any kind of damage.