Fidelity: Ignoring Bitcoin Puts Nation States at Higher Risk Than Allocating It

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Based on findings from the company’s research team, led by analyst Matt Hogan, nations opting out of investing in Bitcoin could potentially encounter higher risks compared to those willing to incorporate the digital currency into their assets.

A New Era of Strategic Reserves

In the report named “2025 Outlook,” Hogan pointed out that it’s likely that major financial institutions like central banks, sovereign wealth funds, and government treasuries could soon start investing in Bitcoin strategically. He used the examples of Bhutan and El Salvador, which saw significant profits from their Bitcoin investments within a short period, as evidence of successful strategies. Hogan predicted that other countries might follow suit with similar investment strategies.

By adopting innovative strategies, countries like Bhutan and El Salvador are leading the charge in the realm of cryptocurrencies. Specifically, El Salvador is recognized worldwide as a pioneer in Bitcoin adoption, using this digital money not only to stimulate economic advancement but also to attract more tourists.

US Leadership at a Crossroads

The approach of the U.S. towards Bitcoin continues to be a subject of discussion. Although the country owns around 198,109 Bitcoins, worth more than $20 billion, primarily obtained through asset forfeitures, regulatory restrictions prevent it from incorporating these assets into its national reserves. Typically, confiscated Bitcoins are sold at auction instead.

President-elect Donald Trump and Senator Cynthia Lummis have suggested creating a strategic Bitcoin reserve. Known as the “Bitcoin Act of 2024,” proposed by Lummis, would instruct the Treasury Department to purchase up to 1 million bitcoins over a five-year period. The aim is to combat inflation and strengthen the US dollar. If implemented, this move could potentially inspire other countries to do the same, according to Hogan’s explanation.

Furthermore, Hogan cautioned that these actions could take place covertly. He explained that no country would publicly announce its Bitcoin adoption plans because it would increase prices and diminish their tactical edge.

Bitcoin’s Mainstreaming Will Transform Traditional Finance

Based on a Fidelity study, the increasing use of Bitcoin by countries could trigger massive expansion within the overall cryptocurrency market. The report also highlighted that traditional financial institutions (TradFi) are starting to offer investment products for digital assets such as spot Bitcoin and Ethereum ETFs. Hogan even described this trend as a significant turning point, suggesting that structured digital asset products are becoming increasingly popular.

As an analyst, I’m observing the significant rise of tokenization, a term Fidelity has coined as the “game-changer” for 2025. The value of tokenized assets on the blockchain is projected to surge, nearly doubling to $30 billion by the end of this year. Hogan, in his statement, emphasizes that the potential of tokenization in financial services and beyond is just scratching the surface of its capabilities.

A Strategic Inflection Point

From my perspective as a crypto investor, Fidelity’s analysis highlights a significant change in how countries view Bitcoin. It’s not just about addressing issues like inflation and budget deficits anymore; adopting Bitcoin as part of a strategic reserve is a reflection of broader geopolitical and economic aspirations. In essence, Hogan was spot on when he said, “The people are the policy.” This underscores that the decisions made by leaders will determine the course of Bitcoin adoption.

2025 could signal the beginning of a fresh phase in digital assets, as national governments embrace them, spurring advancements and solidifying Bitcoin’s position as a crucial element in global finance. It’s high time for both investors and policymakers to gear up for this impending acceleration.

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2025-01-09 15:10