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The Case for Bitcoin: A New Report from Fidelity Investments

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"The Case for Bitcoin: A New Report from Fidelity Investments"

Our proprietary research may help advisors and investors understand bitcoin's unique features and risk/return characteristics as an alternative investment within a multi-asset class portfolio. We also look at the potential role of a small allocation to bitcoin.

Key Takeaways:

  • Bitcoin is a fixed-supply digital bearer asset that provides the medium of exchange for a potentially transformative technology. It has certain characteristics similar to gold, venture investments, and other network goods. Its future price path will thus depend on the adoption  rate and the robustness of the network that it underlies.
  • A research-based framework with small hypothetical allocation ranges may help determine an appropriate path to investing in bitcoin. We provide a macroeconomic foundation and quantitative analysis to explore the key investment theses that one must believe to invest, considerations about sizing and sourcing, and how to think about risk. 
  • Investors have several options to gain exposure, including a direct investment and spot/futures-based investments. The recent regulatory approval of spot exchange traded products (ETPs) as registered investment products in the United States could open access to a broader group of investors – enabling easier access for advisors and their clients.
  • Our analysis suggests small portfolio allocations could have an outsized positive impact in an optimistic adoption scenario, allowing annual retirement spending to increase a certain percent range, while limiting the loss to annual retirement income to less than 1% if bitcoin were to lose all its value. For detailed allocation breakdowns, please download the full research report.

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