Bitcoin Has Entered The More Mature Part Of Its Adoption Cycle: Fidelity
Bitcoin is already entering the latter part of its S-curve adoption cycle, leading to less volatility for the asset than old investors may be used to, according to Fidelitys Director of Global Macro Jurrien Timmer.
During an interview published on Tuesday, the macro analyst explained how he believes Bitcoin will size up next to gold, and where the asset belongs within a traditional 60/40 portfolio.
Bitcoins Place Among Traditional Assets
Timmer acknowledged that the recent approval of Bitcoin spot ETFs in January has helped democratize the asset, putting it on the menu for investors regardless of their technical sophistication.
This allows investors to analyze Bitcoin right alongside stocks, bonds, and ETFs, when determining how to construct their portfolio, and when looking to an investment to fulfill a particular need.
Its an exponential version of gold, said Timmer, likening Bitcoin to other hard assets that perform well when interest rates are low, or during periods of fiscal dominance.
However, while Bitcoin may appreciate against those other assets and possibly eat into their markets, Timmer says there will be a point of mean reversion where investors return to buying them for their cheap relative valuations.
[If] gold is at $2000 and Bitcoin is at $1 million, at some point investors are gonna say these other asset classes are really becoming cheap while this side is becoming expensive.
In terms of Bitcoins place within a portfolio, Timmer said that a 2% allocation would make an impact for buyers given that the assets risk-adjusted returns are in another universe.
Its enough to matter just because of the return profile that weve seen, but not so much that its going to make you wanna sell everything when it goes against you, he said.
Bitcoins Maturity And Decreasing Volatility
While acknowledging that Bitcoin is currently a boom and bust asset, Timmer said he predicts Bitcoin will eventually mature into something less than that, much like gold. This could be a boon for many corporations that incentivizes them to buy more, he argued, as they can use BTC in lew of cash that they rely upon to have stable short-term value.
Part of growing up means transcending that dynamic, Timmer said. As adults, we dont behave the same way as we did when we were teenagers less volatility means fewer crashes but fewer moons as well, and I think thats a good thing.
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