Fidelity releases positive report on Bitcoin as an investment asset

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Last Updated on 14 October 2020 by CryptoTips.eu

Fidelity Digital Assets the crypto arm of financial giant Fidelity has revealed in a report that Bitcoin has performed uniquely to other investments in the past five years. According to the research the report was compiled after interviewing key investors and crypto experts within the space.

Fidelity says that Bitcoin is a distinct financial asset from different public equities or other fixed financial investments like bonds. These forms of investment have an unique risk factor that sees the price change independent of other assets.

However, Bitcoin has little relationship with this type of assets and its movement is solely due to its unique market forces of demand and supply. The research also found out that Bitcoin as an investment vehicle had a correlation of just .11 to other assets when analyzing the 30-day average between January 2015 and September 2020.

Since the correlation measurements range from 1 to -1 the .11 value for Bitcoin means that the leading cryptocurrency has moved neither up nor down compared with other asset class within the 30 days period over the last five years.

This is amazing considering that this also includes broader asset classes such as Gold and US stock market that are constantly being compared with Bitcoin. The report further said that Bitcoin prices were independent to other assets even though there are some few cases where it correlated in short periods.

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Bitcoin considered a great alternative asset for traditional investors

Fidelity believes that Bitcoin would be a great alternative asset for investors and recommended the option of keeping 5% of multi-asset portfolio in Bitcoin to reap greater returns over time regardless of market conditions.

It is also stated that when the Bitcoin allocation surpasses the 5% mark in the case of a bullish run, investors should sell some of the Bitcoin to rebalance their portfolio.

 An advantage of rebalancing is that it forces investors to have the discipline to buy low and sell high.

Alternative assets remain attractive to investors who prefer the mix of stocks, bonds and other holdings. This is because they serve as leverage for the investors when traditional investment assets are under performing.