Bitcoin is an excellent asset for portfolio diversification – Fidelity

In its September 2023 study, Fidelity Digital Assets presents a compelling case for Bitcoin as a distinctive asset class, highlighting its potential over traditional investments like gold and stocks. This report, authored by Chris Kuiper and Jack Neureuter, underscores the uniqueness of Bitcoin in terms of asset diversification.

The report firmly states that “Bitcoin is better than gold” when it comes to fulfilling specific portfolio needs. Bitcoin’s limited supply, capped at 21 million coins, resembles the finite nature of precious metals, making it a potential hedge against inflation, setting it apart from digital assets with indefinite supply mechanisms. (CryptoNews)

Moreover, Bitcoin has demonstrated resilience against “innovative destruction,” remaining a dominant force in the industry despite the emergence of newer digital currencies and blockchain projects. Its decentralized nature shields it from systemic risks that centralized financial systems might encounter.

Fidelity’s perspective extends to Bitcoin as a store of value, emphasizing its mathematical underpinnings and cryptographic security advantages. Bitcoin’s ability to cross borders without intermediaries and its unassailable ownership proof via blockchain technology give it a technological edge over gold.

The report highlights the significance of Bitcoin’s underlying technology, including the SHA-256 cryptographic algorithm, ensuring robust security. Irreversible transactions enhance transactional integrity compared to traditional financial systems.

Regarding regulations, the Fidelity report acknowledges their importance. While regulatory scrutiny can pose challenges, it can also attract mainstream investors. Well-defined regulatory frameworks can drive away bad actors and enhance the market’s reputation, thereby making it more secure and trustworthy.

Despite recognizing possible concerns like the volatility of Bitcoin’s price and the looming risk of technological obsolescence, the report also emphasizes the cryptocurrency’s position as a pioneer in the sector and the robust support it receives from a dedicated community of developers and miners.

These factors contribute to its long-term viability, and superiority compared to gold.

Related Story:  “Bitcoin Is An Uncorrelated Asset,” Says Fidelity Report

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