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Fidelity to launch Bitcoin fund after pondering stock-to-flow model

Posted: 28 August 2020 7:42 pm
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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.

Aspirations

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.



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Disclosure: The author holds cryptocurrencies including LINK at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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