*https://www.fidelitydigitalassets.com/sites/default/files/documents/bitcoin-alternative-investment.pdf*
Ria Bhutoria, Director of Research, Fidelity Digital Assets, October 2020
At Fidelity Digital Assets, we have conversations with people at distinct stages in their digital asset journey who are proactively working on their investment thesis, seeking validation of their thesis or have yet to embark on the process. In response, we are compiling a series of reports to examine the perspectives that are driving interest and investment in bitcoin today and those that may evolve and gain traction in the future. In doing so, we hope to help people establish a comprehensive evidence based thesis and understanding, especially as bitcoin becomes increasingly integrated with traditional markets and portfolios.
Bitcoin is many things to many people; why they choose to hold bitcoin depends on their circumstances and views of what bitcoin is today and what it could become in the future. These views have been the subject of misunderstanding, confusion, and debate. Historically, such debates have revolved around whether bitcoin, the native asset, is a store of value, medium of exchange, financial asset, all of the above, or none of the above. Additionally, it is still undetermined whether the underlying blockchain is best used to facilitate wholesale clearing and settlement, consumer payments or the anchoring and timestamping of data.
The truth is, as the ecosystem matures, Bitcoin may simultaneously serve many functions – either foundationally or through incremental layers. One of the beautiful things about Bitcoin is that its success is not predicated on serving a singular purpose.
In our Institutional Digital Asset Survey, we found that almost 60% of the investors surveyed who think digital assets have a place in a portfolio believe they should be considered alongside other alternative investments. This insight from our survey led us to focus this report on the narrative that bitcoin, the first and most prominent digital asset, is an uncorrelated asset that can serve a similar role as an alternative investment in improving a portfolio’s risk-adjusted returns and to discuss:
In conducting research for this report, we interviewed a few of the top investors and thinkers in the industry and incorporated their investment perspectives. We offer a special thank you to Cathie Wood and Yassine Elmandjra (ARK Invest), Meltem Demirors (CoinShares), Michael Robertson (Fidelity Investments), Elisabeth Préfontaine (Octonomics), and Jeff Dorman (Arca) for sharing their thoughts and feedback.