Counterparty risk and “accountability” are enduring qualities that set Bitcoin apart, says Fidelity Digital Assets.
Future may “show a stark contrast to the rest of the world,” asset manager Fidelity Investments predicts.
In a recent research paper, “The Rising Dollar and Bitcoin,” published Oct. 10, Fidelity Digital Assets, the company’s crypto affiliate, drew a line between Bitcoin and other currencies.
Bitcoin ‘Fails to Meet Someone Else’s Responsibility’: Report
While no stranger to assuming optimism about Bitcoin, Fidelity continues to publicly profess its faith in the largest cryptocurrency despite a nearly year-long bear market.
In the report, the analysts indicated the extent to which Bitcoin as an asset has deviated from what is currently considered the norm. In the new environment of high inflation, the fixed issuance and supply of Bitcoin are particularly important.
“Thus, Bitcoin may soon stand in stark contrast to the path the rest of the world may take in fiat currencies, namely the path of increased supply, additional currency creation, and central bank balance sheet expansion.” , they explained.
Related: Bitcoin Price ‘Easily’ Must Hit $2M in Six Years – Larry Lepard
While the title of the report weighs in on the strength of the US dollar relative to other world currencies, it was the pound sterling crisis that Fidelity flagged as the kind of impossible event in a bitcoin standard.
In summary, the company forecast that “further monetary debasement may be required to alleviate high debt burdens among developed economies, while recent events in the UK have shown counterparty risks and liabilities in the system, which makes monetary intervention and doses of liquidity features that are not likely to go away anytime soon.”
“By comparison, bitcoin remains one of the few assets that is not someone else’s liability, has no counterparty risk, and has a supply schedule that cannot be changed,” he concluded:
“Whether these properties start to look more attractive is ultimately up to investors and the market.”
Bitcoin monthly performance chart (screenshot). Source: Coinglass
Volatility remains the base case of the crypto sector
On the other hand, Fidelity’s optimism about the current state of the Bitcoin network itself differs from the nervousness of his peers in the crypto industry.
The company’s research summary for the month of October noted that the illiquid supply of BTC is at a ten-year high, as well as the increase in network foundations.
As Cointelegraph reported, meanwhile, in its latest weekly newsletter, “The Week On-Chain,” on-chain analytics firm Glassnode concluded that volatility is likely to be what characterizes Bitcoin going forward.
“Bitcoin market is primed for volatility, with both option and realized implied volatility falling to record lows. On-chain spending behavior is compressing at a decision point where spot prices intersect with the incumbent’s short-term cost basis,” he concluded, the summarized data points.
Additionally, traders are bracing for a violent breakout of Bitcoin’s tight trading range in a few weeks.
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