Fidelity Digital Assets, which is the section of Fidelity that handles cryptocurrencies, recently issued a report that suggests that investors allocate 5% of their assets into Bitcoin. The report was very positive on crypto assets, and pointed out they have a low correlation with major asset classes. It also made the case for Bitcoin's market cap to rise above $1 trillion.
The report states,
“If bitcoin were to capture 5% of the alternatives market as measured by CAIA, that would equate to an incremental $670 billion growth in its market size. If it were to capture 10%, that would expand its market size by $1.3 trillion.”
Why it matters: Fidelity is one of the most influential investment companies in the USA, especially with retail investors. By advising that investors begin to look at Bitcoin as a staple portfolio asset, the company may set off a massive buying spree by long-term retail investors who won't care about Bitcoin prices, aside from rebalancing their holdings on a quarterly or yearly basis. The initial buying would drive prices up, and could attract even more attention for the sector. As the buyers would look at Bitcoin as a long-term hedging asset, falls in Bitcoin prices could actually drive more buying, as holdings were added to make up for losses in dollar value.