Fidelity Discusses Bitcoin as Portfolio Insurance – May Soon Stand in ‘Stark Contrast’ to Path Fiat Currencies Take – Featured Bitcoin News

Fidelity Digital Assets, a subsidiary of Fidelity Investments, says 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, further currency creation and central bank balance sheet expansion.”

Fidelity says Bitcoin can 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 can be considered portfolio insurance” as the rising dollar affects global currency markets.

“The strengthening US dollar is wreaking havoc among other countries and could put pressure on the Federal Reserve to soon reverse its tightening monetary actions, which has precedent based on 1985’s Plaza Accord,” explained Fidelity.

In addition, more monetary easing may be needed to alleviate the high debt burden among advanced economies, the report said, adding that “recent events in the UK have highlighted counterparty and liability risks in the system, prompting monetary intervention and doses of Liquidity features that aren’t likely to go away anytime soon.” The firm continued:

In comparison, bitcoin remains one of the few assets that does not match the liability of another person, has no counterparty risk and has a delivery schedule that cannot be changed.

“Therefore, bitcoin may soon be in stark contrast to the path that the rest of the world and fiat currencies may take – namely the path of increased supply, further currency creation and expansion of the central bank’s balance sheet,” Fidelity clarified.

“While the US dollar remains very strong against other fiat currencies, the reality of the US financial system is that it is in a similar position to the UK in the long run,” Fidelity argued, elaborating:

With the high debt-to-GDP ratio, it is unlikely to be equipped to handle higher real interest rates over an extended period if the country aims to meet its current debt obligations.

Fidelity Digital Assets has increased its crypto services. The firm will begin offering ether (ETH) trading and custody on October 28. It also recently announced the launch of an Ethereum index fund, citing client demand for exposure to digital assets beyond bitcoin.

Do you agree with Fidelity on bitcoin as portfolio insurance? Let us know in the comments section below.

Kevin Helms

A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of economics and cryptography.