Bitcoin’s recent rally past $11,000 for the first time in about a year has been impressive by many standards. The move brought BTC past a crucial technical resistance, shook out many bears, and increased sentiment in the industry drastically.
Even still, there remain skeptics. Peter Schiff, the chief executive of Euro Pacific Capital and a prominent gold bull, wrote as BTC moved past $10,000:
“Two of the last three times #Bitcoin rose above $10,000 in Oct. of 2019 and in Feb. of 2020 it soon fell by 38% and 63% respectively. The last time Bitcoin rose above $10,000 was in May, and it only fell by 15%. It’s above $10,000 again today. How big will the next drop be?”
Yet the crypto asset branch of Fidelity Investments — a $2 trillion Wall Street asset manager and financial services company — released a report on Jul. 30 indicating that demand for BTC should increase over the medium to long term.
Higher demand, assuming consistent or decreasing supply, should lead to higher prices.
Why Bitcoin demand will increase in the long run: Fidelity Investments
In a report titled “Bitcoin Investment Thesis: an Aspirational Store of Value,” Fidelity Digital Assets identified five “longer-term tailwinds that could fuel adoption” of BTC. These are as follows:
- An increase in monetary and fiscal stimulus triggered by the economic effects of the pandemic will likely make investors to “turn to a new type of fixed supply asset as protection against potential inflation or low-interest rates, but with significant growth potential – bitcoin.”
- Deglobalization, spurred by economic and political trends, could create inflation as global supply chains break down. Bitcoin stands to benefit from this trend.
- Paul Tudor Jones, a billionaire hedge fund manager, has acknowledged Bitcoin.
- Even if we don’t see hyperinflation, Bitcoin’s potential ability to store wealth over long periods of time, compared to the slowly inflating fiat currencies, should give it a bid in the decades ahead.
- The world is undergoing a “great wealth transfer” from baby boomers (and those older than them) to the younger generations. This shift in wealth should naturally favor Bitcoin as there are more millennials bullish about crypto than baby boomers.
Investors are acknowledging the narratives
Fidelity’s report comes shortly after the company revealed that per a survey they spearheaded, institutional investors are rapidly getting acclimated with cryptocurrency as they begin to acknowledge the aforementioned narratives.
In that survey, it was said that 80% of investors surveyed find something interest about the crypto asset class. What makes digital assets interesting, according to the results, include crypto’s long-term upside potential, the technological developments of the industry, and Bitcoin and other altcoins being uncorrelated with other asset classes.
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