The giant investment fund Fidelity ($4.22 trillion) returned to the good vintage that was the year 2021 for bitcoin. We have translated the interesting passages of this retrospective coming from a firm that is not afraid to predict that bitcoin will surpass $100,000 this year.
“It has certainly been a tumultuous year for bitcoin which started the year at $29,000 and ended at $47,000. That is a 64% increase for 2021. […] Bitcoin first saw a rapid rise to a new all-time high of $63,000 in April (a gain of more than 100% in a few months) and then a decline of more than 50%. […] This fall was followed by a new bullish push to a new all-time high of over $67,000 in early November, following the release of (worrying) inflation figures. »
Institutionalization
“Bitcoin and digital assets have increased their respectability among both retail and institutional investors. 2020 has been a pivotal year for institutions that have recognized that this asset class deserves consideration. Some companies have added bitcoin to their treasury, Paul Tudor Jones has publicly declared his admiration for the asset, and even MassMutual, one of the oldest insurers in the country, has invested in bitcoin. This trend continued in 2021, notably with the arrival of the Future ETF. »
“Bitcoin accessibility has grown dramatically in 2021. Bitcoin-focused companies (NYDIG), as well as traditional investment funds, have launched several solutions to try to satisfy the appetite of small investors. , wealth advisors. Although progress has been made, there is still no obvious solution to allocating bitcoin through an exchange-traded fund structure. A spot ETF is still missing. Attention now turns to regulators for 2022.”
“Our annual survey of institutional investor sentiment towards digital assets found that 71% of US and European institutional investors surveyed intend to invest in digital assets. This figure has steadily increased over the past three years. We expect an increase in institutional investment in digital assets in 2022.”
“Today, the digital asset market is just over $2 trillion. Although its growth rate was impressive, it remains relatively small compared to the hundreds of trillions of dollars in assets worldwide. The key to allowing traditional allocators to continue to inject capital […] lies in appropriate regulation and new access to this asset class (spot ETF). […] We believe this will allow the industry to capture more of the hundreds of trillions of traditional assets in the digital asset ecosystem. »
Regulations and “Game Theory”
“Last year, governments around the world took significant action on digital assets. Especially in China with the publication of a document declaring cryptocurrency transactions illegal and banning BTC mining.
Quite the opposite of El Salvador which became the very first nation to make bitcoin legal tender (El Salvador still uses the US dollar, but all businesses must also accept bitcoin as payment). Additionally, El Salvador has rolled out its own wallet, distributed bitcoins for free, and started accumulating reserves of BTC. El Salvador’s president also plans to borrow $1 billion, of which $500 million will be used to buy more bitcoins. The other half will be used to build Bitcoin City. »
“History has shown that capital goes where it is best treated and that it is innovation that brings wealth and prosperity. We are in the presence of a typical case of “game theory”: if the adoption of bitcoin progresses, the countries which obtain a little bitcoin will have an advantage over the others. Therefore, even if some countries are still sulking, they will be forced to acquire it as a form of insurance. In other words, a minimal cost paid today will cover a potentially much higher cost in a few years. So we wouldn’t be surprised to see other sovereign nation states acquiring bitcoin in 2022 and maybe even a central bank. »
“One of the interesting developments of 2021 was the regulations included in the Infrastructure Bill. However, the article of the law was relatively vague and very comprehensive, particularly in its definition of “broker”, which could impose reporting obligations (names and amounts of BTC held by customers to the tax authorities) not only on traditional brokers (exchanges), but also on miners, hardware manufacturers as well as wallet developerss. Leaving aside the content and implications of such legislation for the moment, what we found particularly interesting was how it caused a stir in Washington where significant grassroots opposition has emerged and is succeeded in blocking the bill […]. The regulation of digital assets is however another important step in the maturation of this asset class which is here to stay. »
Other little phrases from the report
“Stablecoins are an increasingly important part of “DeFi”, with growth of more than 385% during the year 2021, from less than $30 billion in circulation to over $140 billion late last year according to Coin Metricsii. […] The Circle (USDC) stablecoin is showing an annual growth rate of around 810% compared to 260% for Tether. USDC is now the second largest stablecoin. There was 5 times more tether than USDC at the beginning of the year, and only twice as much at the end of the year. These massive stablecoin issuances show no signs of slowing down. »
“Non-fungible tokens (NFTs) took center stage in the first half of 2021 due to the outrageous prices being paid for digital art. A digital artwork by an artist known as Beeple has sold for $69 million in a sale at Christie’s. »
“Many would argue that the prices being paid today for some of NFT’s biggest projects are nearly impossible to justify. Although the long-term value of these NFTs is unknown, the impact of the development of digital property rights for art, music and content is likely to be significant. NFTs have prompted more questions than answers over the past year, but we think some of these questions will find better answers in 2022.”
In March 2021, Jurrien Timmer, the Macro Global Director of Fidelity, published an extremely interesting paper praising bitcoin. For him, “IIt’s no longer a question of whether to buy bitcoins, but how much“…
Nicolas Teterel
Journalist / Bitcoin, geopolitics, economy, energy, climate
