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Crypto Potato 2025-01-13 04:33:56

Fidelity Warns: Not Allocating Bitcoin Could Be Riskier for Nations Than Embracing It

Fidelity’s latest report predicted that nation-states, central banks, sovereign wealth funds, and government treasuries may strategically position themselves in the cryptocurrency market by 2025. The prediction follows the approval and launch of spot Bitcoin exchange-traded products (ETPs) in 2024, which triggered significant demand from institutional and retail investors. This new accessibility has streamlined Bitcoin allocations, drawing pensions and endowments into the fold and signaling a broader institutional acceptance of the digital asset as outlined by the asset manager. Bhutan, El Salvador: A Playbook for Nation-State Bitcoin Success? Historically, nations like the US and China have held Bitcoin, but much of this exposure stems from government seizures linked to illicit activities rather than intentional, strategic investment. Fidelity believes this trend is poised to change. The report highlighted the successes of Bhutan and El Salvador, whose proactive Bitcoin strategies have delivered substantial returns. In light of challenges such as rampant inflation, currency debasement, and fiscal deficits, governments may increasingly view Bitcoin as a hedge against economic instability, with the potential costs of inaction outweighing those of adoption. “We expect 2025 to be the year this changes for both acceptance and adoption.” The calls for the US to lead this shift under a potentially Bitcoin-friendly administration have gained significant traction. For instance, Metaplanet CEO Simon Gerovich recently said that Japan and other Asian nations would be sure to follow if President-elect Donald Trump established a US Bitcoin reserve. Both Trump and Senator Cynthia Lummis have expressed interest in establishing a Bitcoin reserve. Lummis, a longtime proponent of cryptocurrency, introduced the Bitcoin Act of 2024, aimed at creating a regulatory framework for Bitcoin’s integration into the US treasury strategy. Should such measures be enacted, Fidelity said that it anticipates the geopolitical and economic pressures to drive other nations to follow suit, though likely under the radar to avoid market disruptions. Hurdles Ahead? Despite these optimistic projections, the report touches on the inherent uncertainty in government action and policy formation. While rhetoric from incoming US officials suggests a favorable outlook for digital assets, competing legislative priorities could delay meaningful progress. However, the recognition of Bitcoin and cryptocurrencies as crucial financial instruments is gaining momentum and has moved the industry from the fringes to the forefront of economic discourse. The post Fidelity Warns: Not Allocating Bitcoin Could Be Riskier for Nations Than Embracing It appeared first on CryptoPotato .

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