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What did Fidelity actually say about Bitcoin?

Photo of: Joseph Stone
by Joseph Stone

Decidedly, more and more large institutional and private players are entering the world of cryptocurrencies in general and Bitcoin in particular. Recently, for example, the company Microstrategy has invested more than 400 million dollars from BTC, Square, the company of Twitter’s CEO has invested 50 million dollars in Bitcoin. And these are not isolated examples. We are indeed seeing a real craze for BTC from traditional investors, companies listed on the stock exchange.

Here is another example of this investor interest in Bitcoin with the financial giant Fidelity Investments, which has just released a detailed report called Bitcoin Investment Thesis, subtitled Bitcoin’s role as an alternative investment.

In their survey of institutional digital assets, they found that nearly “60% of investors surveyed believe that digital assets have a place in a portfolio”.

The study reviews the different advantages (quantitative and qualitative) of including Bitcoin in a portfolio and performs several simulations by allocating different percentages “We measured the impact of allocating 1%, 2% and 3% to a portfolio with a 60/40 equity and fixed income ratio”.

Fidelity Investments demonstrates the value of a portfolio with Bitcoin 102.
The results show that “The annualized returns of portfolios with an increasing allocation of Bitcoin outperformed a portfolio containing no Bitcoin over all the time horizons shown here, up to September 2020”.

Fidelity Investments Demonstrates the Value of a Portfolio with Bitcoin 103
The report further states that while volatility was high for portfolios containing bitcoins, the magnitude of the volatility was less than the increase in returns, resulting in adjusted returns and risks that improve with increased exposure to bitcoins.

According to the report, Bitcoin has many advantages: “Bitcoin is easy and inexpensive to enter and exit, as it trades 24/7 with significant daily volume. Moreover, it is much more accessible because it democratizes access to investment”.

“Bitcoin itself does not discriminate according to investor profile or geography, and it is open, public and accessible to anyone with a cell phone or computer and an Internet connection since the first day of its creation”.