Bitcoin’s journey from ‘good for diversification’ to ‘key’ part of an investment portfolio

Bitcoin’s journey from ‘good for diversification’ to ‘key’ part of an investment portfolio

Investors who are bullish on cryptocurrencies are betting more on digital assets than other asset classes such as equities. The shift towards favoring cryptocurrency over stocks is driven by solid returns on investments. Very quickly, Bitcoin is making its mark to become one of the prominent inclusions in any portfolio.

Bitcoin’s Growing Role

Fidelity's Chris Tyrer sat down with @JackFarley96 to discuss the role of crypto in investment strategieshttps://t.co/ShF6wkGIU6— Blockworks (@Blockworks_) December 10, 2021

Chris Tyrer, head of Fidelity Digital Assets Europe shed light on Bitcoin’s increasing dominance as a portfolio inclusion in a recent interview. He believes that crypto native assets such as Bitcoin will play a very prominent role in investment portfolios going forward.

The said asset class has a few complications – it has different characteristics compared to traditional securities. Such as “different security profiles, wallets and private keys and QR codes and so on.” Still, BTC has enjoyed a significant demand and continues to march despite such complications. Meanwhile, platforms such as Fidelity makes it accessible for a user to HODL the flagship token.

Talking about BTC’s demand hike at Fidelity, the said individual opined:

“…over the past 12 to 15 months, you know, it’s a sea change in terms of interest and attitudes from that investor segment. Every investment professional in the world is trying to understand the core aspects.”

Having said that, some of the clients under the flagship firm still remain reluctant to commit to the vision of cryptocurrencies. Nevertheless, this hiccup could fade away overtime. He asserted:

“Cryptos like Bitcoin are still very divisive. Some people are absolutely ‘evangelical’, and there is a lot of people who don’t see this as being transformational technology. But it’s our job to help bridge that gap”

Concerns

Concerns regarding Bitcoin were discussed in the conversation as well. The main one is its volatility, doubts concerning its fit into a portfolio and asset classification. Lastly, people have pointed at the growing ESG concerns mainly caused due to mining operations.

While these issues might be redundant, here’s the latest thread under this blanket. Muneeb Ali, a Bitcoin veteran tweeted this- something to watch out for.

Since Bitcoin’s invention, Bitcoin maximalists continue to pose one of the greatest risks to the asset’s growth. Here’s why:

2/ Bitcoin maximalism assumes a zero-sum world. However, we’re in an expanding crypto economy.Attacking developers and new use-cases doesn’t help Bitcoin. It only encourages those developers and use-cases to move to other ecosystems like Ethereum and Solana.— muneeb.btc (@muneeb) December 6, 2021

The crypto market is expanding at an impressive rate – there’s no denying this. Consider this: BTC maximalists have called Ethereum a “scam” for years now. But is that really the case? Ethereum has continued to flourish, with more developers onboarding the network as they look to build their L2 applications.

4/ We need a strategy to attract more developers and encourage new functionality layers, e.g., for smart contracts or scalability. Instead, the maximalist circles make fun of every new use-case in the crypto industry.Betting against devs is not what Bitcoiners used to do.— muneeb.btc (@muneeb) December 6, 2021

There are many shortcomings in Ethereum. However, Bitcoin currently has little to offer as alternatives. There are no major decentralized exchanges, liquidity protocols, stablecoins in the Bitcoin ecosystem.

One of the reasons why developers moved away from the BTC ecosystem to other ecosystems such as ETH and SOL. Maximalists should wake up and face the reality instead. The veteran opined: “laughing at every experiment will only lead to Bitcoin’s dominance dropping.”

According to him, “..it’s time to build Bitcoin apps to make BTC a productive asset. We should welcome developers and entrepreneurs. The maximalist strategy served its purpose in 2017 and no longer works; let’s focus on the builders now.”

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