Fidelity Warns: Not Allocating Bitcoin Could Be Riskier for Nations Than Embracing It

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As a crypto investor, I’m keeping an eye on the forecast that Fidelity has made – they believe that by 2025, major players like nation-states, central banks, sovereign wealth funds, and government treasuries could be making strategic moves in the cryptocurrency market. This prediction is based on the anticipated approval and launch of spot Bitcoin exchange-traded products (ETPs) in 2024, which could create a surge in demand from both institutional and individual investors, as they look to capitalize on this emerging market trend.

The introduction of this latest ease-of-use feature has made it simpler for Bitcoin investments, thereby attracting pension funds and endowments, which indicates a wider institutional approval of the digital currency. As explained by the asset manager, this move signifies a broader acceptance of Bitcoin as a legitimate investment option.

Bhutan, El Salvador: A Playbook for Nation-State Bitcoin Success?

Historically, countries such as the U.S. and China have come into possession of Bitcoin due to government seizures connected to illegal activities, rather than through deliberate, strategic investments. However, Fidelity predicts that this pattern may shift in the future.

The report emphasized the achievements of Bhutan and El Salvador, who have seen significant benefits from their forward-thinking Bitcoin approaches. Faced with issues like high inflation, currency devaluation, and budget deficits, governments might find Bitcoin to be a shield against economic turmoil. The possible drawbacks of not acting could eventually surpass those associated with embracing the digital currency.

“We expect 2025 to be the year this changes for both acceptance and adoption.”

There’s been growing momentum for the U.S. to spearhead this transition under a prospective administration open to Bitcoin. For example, Metaplanet CEO Simon Gerovich stated that if President-elect Donald Trump were to institute a U.S. Bitcoin reserve, other countries like Japan and those in Asia would likely follow suit.

Trump and Senator Cynthia Lummis have shown support for setting up a Bitcoin reserve. Notably, Senator Lummis, who has been an advocate for cryptocurrency, proposed the Bitcoin Act of 2024, which aims to create guidelines for incorporating Bitcoin into the U.S. government’s financial strategy.

As an analyst, I predict that if these measures are implemented, other countries may respond by adopting similar strategies, albeit covertly to prevent market instability.

Hurdles Ahead?

Although the forecast appears promising, the document acknowledges the underlying unpredictability in government decisions and policy-making processes. While the new U.S. administration’s discourse seems encouraging towards digital assets, conflicting legislative agendas might postpone significant advancements.

In essence, the acceptance of Bitcoin and digital currencies as significant financial tools is on the rise, pushing their discussion from peripheral to central in economic conversations.

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2025-01-13 07:38