Fidelity Digital Assets president Tom Jessop says that bitcoin is not a true store of value just yet because the digital asset is still too volatile, Reuters reported. However, investors are optimistic bitcoin will attain this status.
“We use the word ‘potential store of value’ as bitcoin is still extremely volatile, and by any standard perhaps would not achieve the mantle of a true store of value,” Jessop told Reuters’ Global Investment Outlook Summit 2020 on Thursday.
“But aspirationally it is, and that’s one of the reasons why so many investors are now thinking about this space constructively.”
Bitcoin (BTC) hit an all time high of $19,864 on Nov. 30, fuelled by massive institutional demand. The asset notched up about 47% in gains last month, and is up more than 400% since the Black Thursday crash of March 12.
Institutional investors such as Microstrategy, Square and others have muscled their way into crypto because they are convinced that bitcoin – with its maximum supply cap of just 21 million coins – is a safe hedge against monetary inflation, particularly at a time of limitless government spending.
But the digital asset has also elicited derision on account of its volatility. For example, in 2017, bitcoin soared about 400% in just 35 days, before it lost half its value within 30 days, Reuters reported. Recently, BTC lost $3,000 of its value in a matter of minutes after having rallied strongly.
However, Jessop’s comments appear in contrast to Fidelity Digital Assets’ deep involvement in the cryptocurrency business. The company, a unit of $3.3 trillion-asset manager Fidelity Investments, offers crypto trading and custody services to financial companies and corporates.
In October, Fidelity released its Bitcoin Investment Thesis, which on the whole supported bitcoin as viable investment option. The firm has also expanded its crypto trading and custody services to Europe and Singapore citing “significant interest”.