New Fidelity report flags ‘stark contrast’ between Bitcoin and fiat currencies
Bitcoin’s (BTC) future could “stand in stark contrast to the rest of the world,” predicts asset manager Fidelity Investments.
In a recent research paper, “The Rising Dollar and Bitcoin,” published on October 10, Fidelity Digital Assets, the firm’s crypto subsidiary, drew a line between Bitcoin and other currencies.
Bitcoin “does not equate to another person’s liability:” Report
While hardly a stranger to bullish takes on Bitcoin, Fidelity continues to publicly reiterate its faith in the largest cryptocurrency despite the nearly year-long bear market.
In the report, analysts stated how far Bitcoin as an asset has deviated from what is currently considered the norm. In the new hyperinflationary environment, Bitcoin’s fixed issuance and supply is of particular importance.
“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,” they explained.
Related: Bitcoin price ‘easy’ due to reach $2M in six years – Larry Lepard
While the report’s title places leverage on the strength of the US dollar against other world currencies, it was the crisis in the British pound that Fidelity highlighted as the kind of event impossible on a Bitcoin standard.
In summary, the firm predicted that “more monetary easing may be needed to alleviate the high debt burden among developed economies, while recent events in the UK have shown counterparty and liability risks in the system, making monetary intervention and liquidity doses have features that are unlikely to disappear with the first.”
“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,” it concluded:
“Whether these properties start to look more attractive is ultimately up to investors and the market to decide.”
Volatility remains the base case for the crypto sector
Elsewhere, Fidelity’s optimistic view of the current state of the Bitcoin network itself diverges from the nervousness of its peers in the crypto sector.
The firm’s summary of research for the month of October pointed to BTC’s illiquid supply hitting a ten-year record, in addition to growing network fundamentals.
As Cointelegraph reported, meanwhile, in its latest weekly newsletter, “The Week On-Chain,” chain analytics firm Glassnode concluded that volatility is likely to be what characterizes Bitcoin going forward.
“The Bitcoin market is primed for volatility, with both realized and option-implied volatility falling to historic lows. On-chain spending behavior is being compressed to a decision point, where spot prices intersect with the cost basis for short-term holders,” it concluded, summarizing the data points covered.
More broadly, traders are bracing for a violent exit from Bitcoin’s narrow trading range within weeks.
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