Researchers at Fidelity Investments, one of the world’s largest asset managers, are doubling down on bitcoin, describing it as a “superior form of money” that gives it a value not replicated by other tokens.
In a white paper released last week, Chris Kuiper and Jack Neureuter wrote that bitcoin’s status as a “monetary good” and store of value puts it in a different investment category than other tokens, which they said exhibit venture-capital-like properties.
Of course, bitcoin’s recent track record as a store of value is specious at best. The token has performed well this year, rising 63% to about $27,000, despite mostly being stuck in a range for the last several weeks. But it’s still well off the November 2021 peak of about $64,000, and bitcoin’s value over time has often moved in tandem with other risk assets, which have been hurt by the Federal Reserve’s rate-raising campaign.
Since bitcoin’s creation in 2009, developers have created scores of copycats. They’ve also created networks such as Ethereum, which have similar properties to the bitcoin network but which proponents say could also be used as a sort-of decentralized internet that can host applications not possible with bitcoin.
For investors interested in digital assets, it’s best to think of those newer networks more like speculative venture-capital investments, the Fidelity researchers said, while bitcoin can be thought of as a monetary instrument.
Fidelity itself is deeply invested in the crypto industry being a long-term success. It recently launched crypto broker accounts, allowing traders to buy bitcoin and Ether alongside stocks. It also allows companies to offer bitcoin investments in their 401(k) plans, a move that’s drawn regulatory ire. It regularly lobbies Congress on crypto regulation and is among companies that wants to launch a spot bitcoin exchange-traded fund in the U.S.
The Fidelity researchers acknowledged that bitcoin investments come with risk but argued that investors are “overestimating the downside risks of bitcoin when compared to other digital assets,” given the token’s longevity and staying power amid crises in traditional finance.
“Not only do we believe that investors should consider bitcoin first to understand digital assets, but that bitcoin should be considered first and separate from all other digital assets that have followed it,” the researchers wrote.
Write to Joe Light at [email protected]
Read the full article here