Fidelity Advises Countries, Central Banks To Buy Bitcoin
is one of the largest financial services companies in the world, last week advised
in a note that other countries including the central banks should take advantage of
low cryptocurrency prices and buy Bitcoin like El Salvador and Tesla. As per
Fidelity those who invested in digital coins when the price is low will have a
competitive advantage in the future.
Due to Bitcoin's volatile nature investors are suggested by market experts to keep cryptocurrency investments under 5% of the portfolio at the beginning. Wall Street giant Fidelity is now advising countries to invest in Bitcoin.
In November bitcoin, which is the number one cryptocurrency in terms of market capitalization, has shown a price of almost $70,000 per bitcoin. This price was an all-time high but then price crashed back, losing around 40% of its value from its mid-November high and wiping $1 trillion from the combined crypto market.
Fidelity director of research Chris Kuiper and research analyst Jack Neureuter explained "If bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance”. The financial analyst also added that they "wouldn't be surprised to see other sovereign nation-states acquire Bitcoin in 2022 and perhaps even see a central bank make an acquisition."
Countries and other big firms investing in bitcoin:
In September, El Salvador declared bitcoin as its official currency along with the U.S. dollar and purchased bitcoin. In 2022, the country is planning to purchase another $500 million worth of bitcoin which will be funded by the issuance of $1 billion worth of tokenized bonds, and plans to create an ultra-low tax "Bitcoin City."
As per the report, BlackRock has opened a couple of its funds to "the possibility of investing in Bitcoin futures. In multi-asset portfolios Ruffer Investment Management added Bitcoin although pulled out after five months, making a profit of around $1.1 billion.
Mayor of Rio de Janeiro, Eduardo Paes reportedly talked about his plan to allocate 1% of the city's treasury reserves to cryptocurrencies. Last year, U.S. mayor of Miami, Francis Suarez highlighted his plan to put some of the city's treasury into bitcoin.
CBW - External Analyst