Fidelity Digital Assets says that Bitcoin will become a stable asset, but that its price volatility at the moment still prevents it from being a store of value.
Bitcoin meets all the main criteria of a value reserve, but has not yet officially acquired that status, say Fidelity Digital Assets researchers in a survey.
Entitled “Bitcoin investment thesis: an aspiring reserve of value”, the article states that Bitcoin is capable of becoming an “insurance policy” that can provide protection against various consequences of contemporary monetary practices.
Introducing the first report in our Bitcoin Investment Thesis series by @riasearch, highlighting #bitcoin as an aspirational store of value. Please download and share. Thanks to the many experts and investors that contributed to this piece!
– Fidelity Digital Assets (@DigitalAssets) July 29, 2020
“We present the first report in our @riasearch Bitcoin Investment Thesis series, highlighting #bitcoin as an aspirational store of value. Download and share. We thank the experts and investors who contributed to this study! ”
An excerpt from the study says:
“Many investors consider Bitcoin to be an aspirational store of value because it has the properties of a store of value, but it still needs to be widely accepted as such.”
A store of value, as the name suggests, is an asset that can save the value that has been placed in it for long periods of time. One of its main features is the ability to retain purchasing power and utility in the future.
While Bitcoin price volatility may seem like a direct opposite of “retaining value”, Fidelity Digital Assets pointed out that this is really one of its “differentiators” as it helps to attract attention, development and innovation to cryptocurrency – at least in start.
Volatility is only bad if it goes against you.
Any good investor loves volatility when it is pointed in the right direction.
– Pomp 🌪 (@APompliano) July 27, 2020
“Volatility is only bad if it is against you.
Any good investor loves volatility when it is aimed in the right direction. ”
Recently, Anthony Pompliano, co-founder of Morgan Creek Digital, also echoed that sentiment during his heated debate with Peter Schiff, arguing that Bitcoin’s volatility is a double-edged sword that can be detrimental and beneficial to investors.
Buy Bitcoin at Coinext
Buy Bitcoin and other cryptocurrencies at the safest broker in Brazil.
Register and see how simple it is, visit: coinext.com.br
Four reasons why Bitcoin can become a store of value
One of the reasons why Bitcoin can become a store of value is its “digital scarcity”, noted Fidelity. Since Bitcoin issuance is limited to 21 million coins at the protocol level, Bitcoin can be considered a deflationary asset thanks to its coded immunity to over-saturation.
“Scarcity is the main characteristic cited in reference to a good value reserve, as it is essential to protect against depreciation of real value in the long run,” said the document.
The authors highlighted a second supporting factor, which is the current low interest rates in traditional finance, as well as unprecedented levels of global monetary stimulus, may have “unknown consequences” and are currently “adding fuel to the fire of Bitcoin awareness and adoption”.
“Long-term factors include‘ slow and steady ’inflation and the large transfer of wealth to an age-old demographics that have a favorable view of digital assets,” the authors noted, adding two more reasons.
In short, Fidelity Digital Assets acknowledged that while Bitcoin’s success as a store of value is not guaranteed, the cryptocurrency has everything it needs.