Fidelity's Digital Strategist Encourages a Modest Investment in Bitcoin Amid Rising Interest
Summary:
Fidelity Investments' Matt Horne recommends that investors should dedicate a small part of their portfolio to Bitcoin, despite their viewpoint on the virtual currency. His suggestion comes at a time when there is increasing interest in cryptocurrencies from institutional investors and fund managers. Emphasizing the importance of comprehending this technology's potential, Horne encourages investing cautiously to minimize risks and maximize potential benefits. A considerable institutional investment in Bitcoin has been noted since the introduction of Bitcoin ETFs in the U.S., indicating a positive market sentiment for this digital asset.
Fidelity Investments' Digital Asset Strategies Manager, Matt Horne, suggests that investors should incorporate a modest allocation of Bitcoin (BTC) into their portfolio, regardless of their stance on the virtual currency. A CNBC report on June 4 highlighted Horne's reference to the analytical deadlock experienced by many conventional investors and asset managers when faced with cryptocurrency investments. He indicated the struggles related to modelling this type of asset class due to the lack of extensive data. Nevertheless, Horne believes that understanding the potential of this technological innovation and positioning accordingly is vital.
The Fidelity strategist suggests that an allocation of between 1-5% could control the risk associated with Bitcoin value dropping to zero while providing potential benefits from any surge in its value and hedging inflation. Horne's remarks echo the growing curiosity about Bitcoin and other cryptocurrencies from institutional investors and fund managers. This is a sharp turn from earlier dismissive attitudes towards these digital currencies by many financial giants.
Interestingly, institutional interest in Bitcoin and similar digital assets amplified after the launch of Bitcoin exchange-traded funds in the United States in January 2024, catapulting the cryptocurrency's value to more than $70,000 per coin. The latest Coinshares' "Digital Asset Fund Flows" report reveals that Bitcoin funds reported inflows of $148 million during May's last week, aggregating a monthly total of nearly $2 billion.
From the beginning of 2024, Bitcoin funds and exchange-traded products have reported an inflow exceeding $14 billion, while short Bitcoin funds saw a $12.3 million capital outflow in May. This suggests a positive market sentiment for Bitcoin among ETF and ETP investors. The Coinshares' report additionally states that the global asset management of Bitcoin investment funds stands at over $74 billion.
The upcoming magazine issue will delve into Bitcoin's 'supercomputers' and the imminent emergence of BTC DeFi.
Published At
6/5/2024 2:20:21 AM
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