Fidelity Just Removed ‘Huge Obstacle’ to Investing in Cryptocurrencies

Here is why the cryptocurrency space was largely “impressed” by Fidelity Investments announcing it will offer its 27 million customers a way to store and trade digital currencies. 


Fidelity Unveils ‘Fidelity Digital Assets’

Currently, Fidelity manages $7.2 trillion dollars, making it the fourth largest asset manager in the world. It is the leader in the United States when it comes to 401(k) retirement savings plans, and is one of the largest 403(b) retirement plan providers for not-for-profit institutions.

Abigail Johnson, Fidelity Investments CEO

Fidelity has indeed kept a close eye on the Bitcoin space over the past years. Bitcoinist reported that the firm was one of the first to add Bitcoin price 00 to its website over a year ago. It then started looking to hire crypto-fund managers. In September, CEO Abigail Johnson revealed that crypto products were underway.

Johnson didn’t disappoint. Fidelity Investments has just unveiled an entire company called Fidelity Digital Assets to focus strictly on cryptocurrency investment. One of the first crypto custody clients has been revealed to be none other than Mike Novogratz’s Galaxy Digital fund.

Paying Homage to Bitcoin Pioneers

What’s more, the cryptocurrency space was also impressed by Fidelity’s knowledge of Bitcoin’s beginnings, paying tribute to Bitcoin’s pioneers in its announcement Monday, in which it referred to cryptocurrencies as “the evolution of digital cash.”

“Impressed to see Fidelity, a financial institution of worldwide renown, appropriately pay homage to the foundational work by David Chaum, Adam Back, Wei Dai, Nick Szabo, and Hal Finney,” said Bitcoin economist, Tuur Demeester. “Shows maturity and serious commitment to the Bitcoin project.”

Nic Carter

“How’s that for infrastructure?” commentator Nic Carter rhetorically asked, pointing out that the Bitcoin network is by far the most mature crypto-asset today – so much that even incumbent banks are now entering the fray.

“…Fidelity is doing it right: a nod to the cypherpunks and predecessors to Bitcoin,” he noted.

“Abby is my favorite CEO in banking,” added Abra CEO Bill Barhydt on Twitter, praising the executive for not being afraid to be one of the first people to try Bitcoin hands-on as early as 2015.

She was mining bitcoin before other ceo’s knew what bitcoin was.

‘Removes a Huge Obstacle’

With 27 million customers, Fidelity is by no means small fish. In fact, Shapeshift CEO, Erik Voorhees, points out that there won’t be a whole bitcoin for each brokerage customer as there is less than 21 million bitcoin in existence.

“It would be impossible for every Fidelity brokerage customer to own even one Bitcoin,” he wrote. “This is why Bitcoins are worth thousands of dollars, while a dollar is only worth one dollar (and only until next year when it’s worth 97 cents). Save wisely.”
Hunter Horsley, CEO of Bitwise Asset Management, meanwhile shared his thoughts with Bitcoinist, calling this an important moment in history for this “new asset class.” He explained:

For many institutional investors, a trusted custodian like Fidelity entering the space removes a huge obstacle to investing in cryptoassets. I think we’ll look back on 2018, and particularly this moment, as the time that crypto became cemented as a new asset class.

Bruce Elliott, President of ICOx Innovations, noted that these new custodial products from ICE’s Bakkt and now Fidelity will add legitimacy to crypto markets and introduce “seasoned investors” to cryptocurrency. He explained:

Nasdaq and Fidelity are two of the most well respected brands in markets and financial services. This is a signal that financial markets and regulators are gaining clarity and comfort on the outlook for trading cryptocurrencies.

Meanwhile, others like Ben Waters, Head of Digital at IOST, remains cautiously optimistic while warning about retrofitting centralized points of failure into decentralized networks.

“Institutions like Fidelity and Nasdaq entering the space can be a good thing for crypto, as long as the exploitative financial systems (e.g. fractional reserve banking, commingling, etc.) are not piggybacked into the crypto space,” he said. “Historically, the legacy financial system has been used to exploit the general public — making the rich get richer and creating centralized points of failure.”

Akbar Thobhani

Akbar Thobhani, CEO of SFOX, a crypto prime dealer that just raised $22M to build an institutional crypto asset management platform, added:

Nasdaq and Fidelity’s recent announcements prove that cryptocurrency will not be going anywhere anytime soon…Fidelity Digital Asset Services’ focus on cryptocurrency custody and trading services for enterprise clients showcases the commitment and interest they’re seeing from their clients, but we’ll really hit a turning point when Fidelity offers cryptocurrency to their retail and 401K customers.

Meanwhile, Andy Bromberg, president of CoinList sees this as just the latest vote of confidence in digital assets.

“We expect these moves to further increase the confidence of regulators and help drive the law forward,” he added.

Finally, Rahul Sood, CEO of Unikrn, a leading voice in applied crypto at the merger of blockchain, esports, and wagering, thinks that traditional finance as a whole will follow to experience a boom similar to that of the Internet and e-business.

“Crypto is going to break the status quo in fintech, including securities. Fidelity and Nasdaq will not be alone. Soon, asset managers will look at blockchain the way banking looks at the Internet: do or die.”

What are your thoughts on Fidelity entering the crypto space? Share your thoughts below!


Images courtesy of Shutterstock, Twitter

Bitcoin’s Low Volatility Might Mean Price Manipulation Is Waning

Since its inception, Bitcoin has exhibited a highly volatile nature. However, during the past few days, Bitcoin’s price volatility has fallen to the lowest level of 2018. The U.S. Securities and Exchange Commission (SEC) will most likely view Bitcoin’s calmer price oscillations favorably.


Low Volatility Signals That Investors Are Now Holding to Bitcoin

Bitcoin’s (BTC) 00 volatility has been decreasing recently. According to data provided by Highcharts, the Bitcoin volatility index for the latest 30-day estimate is 1.73 percent, and for the most recent 60-day estimate is 2.58 percent.

Legislators and regulators might view Bitcoin’s price stabilization as a positive sign. Investors may also be more likely to see Bitcoin as a potential replacement of gold as a store of value.

As FXEmpire financial expert Bob Mason put it, “The low volatility is also a statement that price manipulation has perhaps abated.”

Moreover, this new price trend indicates that investors are holding on to Bitcoin. According to Mason:

After wild swings and rollercoaster rides, Bitcoin looks to have settled into a long-term relationship with its investors, who are not speculating their days away and appear to be in it for the long haul.

On the other hand, traders might be the only ones who dislike smooth price fluctuations. Traders find sharp price swings, or volatility, in a financial asset to be quite attractive. As volatility increases, the potential to realize a profit more quickly also increases. Certainly, with higher volatility, the risk factor increases as well.

Regulators’ and Legislators’ Concern: Bitcoin Price Manipulation and High Volatility

Bitcoin’s erratic price trajectory might have been one of the main factors that motivated the SEC to reject ETF petitions. In this regard, the SEC has stated that it does not believe assertions that Bitcoin and Bitcoin markets are uniquely resistant to price manipulation and hence volatility.

For example, the SEC document explaining its second rejection of the Winklevoss Bitcoin Trust petition to trade the first ever Bitcoin ETF, refers to a commenter who noted that traders could manipulate trading on the Gemini Exchange because of low trading volumes, adding:

[…] The Trust’s documentation states that momentum pricing of bitcoin has resulted, and may continue to result, in speculation regarding future appreciation in the value of bitcoin, making the price of bitcoin more volatile.

Legislators also saw Bitcoin’s high volatility as pernicious. In July 2018, both the heads of both the SEC and Commodity Future Trading Commission had to attend a Senate banking committee hearing to explain the risks posed by Bitcoin and other cryptocurrencies’ volatility.

At the hearing, the regulators toned down senators’ concerns over the cryptocurrency’s “extreme volatility.” As Fortune reported, SEC Chairman Jay Clayton said:

Just recently the volatility in Bitcoin was not as great as the volatility we’ve seen in other securities, such as the VIX product.

Do you think Bitcoin’s recently reduced price volatility is good or bad? Let us know in the comments below!


Images courtesy of Buybitcoinworldwide (volatility index), Shutterstock.

Bitcoin Will Thrive When Naysayers Like Warren Buffett Will Be ‘Pile of Dust’

The opinions of billionaire Bitcoin naysayers Warren Buffett and Charlie Munger will be obsolete in 20 years as both will be “a pile of dust” and Bitcoin will endure.


Generational Differences

That was the conclusion drawn by research this week about the huge differences between the older and younger generation when it comes to the cryptocurrency.

Using data from Fundstrat Global Advisors and Bankrate, Captain Altcoin and Accept.io’s Admir Tulic notes that Buffett and Munger broadly characterize an aging baby boomer generation struggling to keep up with advances in technology.

The pair had become infamous in cryptocurrency circles earlier this year when they variously described Bitcoin as “rat poison squared,” “turds,” “freshly-harvested baby brains” and more.

“The kid with the smartphone will very likely be an inhabitant of this planet in 20 years. A 94-year-old will be a pile of dust in 20 years,” Tulic summarizes.

Who will affect the world of the future more — a living being or a pile of dust?

18-37 Cohort Will Soon Control $7 Trillion

According to the research, those of the younger generation known as ‘Millennials’ – here aged between 18 and 37 – are the “single largest cohort” the US has ever seen and will control $7 trillion by 2020.

With the specter of the 2008 banking crisis still fresh in their minds, Tulic argues, it is little surprise that they have a distrust of banking cartels and share an affinity to alternatives such as Bitcoin.

Half of American Millennials Interested in Using Primarily Cryptocurrency

“…When you are splitting your life between two parallel universes, virtual and physical, you tend to hear about and run into things from the digital world a 90-year-old investor doesn’t,” he added.

Fundstrat itself remains bullish on cryptocurrency, analyst Tom Lee sticking by his buoyant price forecasts for both Bitcoin and Ether despite a continued bear market which has caused concern for many this year.

On Thursday, Bitcoinist reported, Lee predicted a dramatic rise for Ether to be incoming, saying sentiment around the second-largest cryptocurrency was “overly negative.”

Ecosystem Prepares For Millennial Cash

Meanwhile, the cryptocurrency industry is already planning its campaign to hook the kind of “pissed off” 18-37 bracket investors Tulic forecasts will become pervasive in future.

Not just exchanges, wallet providers and payment merchants; a whole financial services industry is waiting in the wings.

While cryptocurrency-based finance products currently tend to target the institutional investor sector, many projects are betting on lay consumer interest being not far behind Wall Street.

Csaba Csabai, Inlock CEO

“Millennials are living in a digital life. What is the more valuable for a millennial? An Instagram account with 100 thousand followers, a product placement contract, or a gold bar?” Csaba Csabai, CEO of P2P lending platform InLock told Bitcoinist echoing Tulic.

InLock takes its queue from extant Bitcoin lending entities such as BTCJam, Blockfi, and Bitbond, tailoring the loan process to use Bitcoin as collateral, creating a scenario where both transacting parties are immune to price fluctuations.

“In a digital world most of Millennials’ assets are presented digitally,” Csabai added.

They consciously or unknowingly pursue digital assets already. We don’t even need to persuade anyone; we simply respond to that demand.

What do you think about Admir Tulic’s view on Bitcoin between generations? Let us know in the comments below!


Images courtesy of Shutterstock