Fidelity to launch Bitcoin fund after pondering stock-to-flow model
Fidelity's aspiring to help its customers store the world's most aspirational store of value.
In July, Fidelity Digital Assets assessed Bitcoin's value proposition and the stock-to-flow model to conclude that Bitcoin is "an aspirational store of value".
That is to say, it's not mature enough to be a store of value yet, but historically it has been a good store of value per the stock-to-flow model and if that model holds there will be significant gains for Bitcoin in the future, therefore people are treating Bitcoin as a store of value in anticipation of it coming true.
Although "critics of the [stock-to-flow] model contend that the model does not capture demand, a more important driver of market value," it cautions.
It may have been compelling enough though, because earlier this week Fidelity Digital Assets announced that it would be helping aspiring storers of value store that value, with a new Bitcoin fund aimed at high-net-worth individuals and institutional investors.
The new fund has a $100,000 minimum, marking it out as a product for institutional investors. That's no accident.
A survey by Fidelity Digital Assets found that more US institutional investors are finding digital assets more appealing than they did a year ago, although well-heeled investors in Europe are outpacing their American brethren in adoption of crypto.
The survey's numbers are, in general, remarkably high. After surveying institutional investors in both continents Fidelity found that a surprising 45% of respondents in Europe already own digital assets, compared to only 27% in the USA.
For perspective, a survey of a nationally representative slice of the UK population found that only 42% of people in 2019 had even heard of cryptocurrency.
Even among millennials, the most supposedly crypto-friendly generation, you don't find those rates of crypto ownership.
According to the survey, almost 80% of institutional investors found something appealing about digital assets, with the three almost equally compelling characteristics across US and European investors being a lack of correlation to other asset classes (36%), an innovative technology play (34%) and high potential upside (33%).
"These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class. This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions," said Fidelity Digital Assets CEO Tom Jessop, at the time.
By the numbers, Bitcoin still appears to be growing.
Disclosure: The author holds cryptocurrencies including LINK at the time of writing