Fidelity: ‘Countries That Secure Some Bitcoin Today Will Be Better Off Than Their Peers’

While 2020 and 2021 are considered the years of bitcoin’s institutional adoption, Fidelity Digital Assets wrote in a new report that 2022 might be the era of adoption of bitcoin by sovereigns.

• The report contrasted China’s crackdown on bitcoin throughout 2021 to El Salvador taking the “opposite approach” by adopting the digital asset as legal tender.
• “We think the two developments observed this year couldn’t be more opposed. Time will certainly tell which path is more successful,” Fidelity wrote.
• Even though many countries around the world are taking a strict approach to regulating crypto, Fidelity doesn’t believe that outright bans are on the table.
• “An outright ban will be difficult to achieve at best and, if successful, will lead to a significant loss of wealth and opportunity,” reads the report.
• Instead, as more countries adopt bitcoin, other countries will be forced to as well even if they don’t believe in the investment thesis or adoption of bitcoin.
• “We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers,” said the report. “In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost year in the future.”
• At an institutional level, a Fidelity Digital Assets Institutional Investor Survey found that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future.
• The price of bitcoin is down approximately 10% since the beginning of 2022, according to CoinGecko, and is currently trading at $42,853.