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As we continue to figure out all the forces that drive Bitcoin’s price, Fidelity brings us greater insight into Bitcoin’s appeal. Reading through Fidelity’s 29-page report, we can confirm with maturing clarity that Bitcoin’s future is guided by the mass immersion into new social and financial infrastructure. In turn, this creates an ever more engaging interplay between retail and institutional investors.
Why Should We Give Heed to Fidelity?
Founded and still headquartered in Boston, Massachusetts, in 1946, Fidelity Investments has become a domineering global financial giant. You would be better off listing the things not managed by Fidelity. The company offers asset management services for mutual funds, investments, retirement, insurance, securities, and index funds, among many other ventures.
In recent years, Fidelity had expanded into cryptocurrency as befits a leading brokerage company. For this purpose, they launched the Fidelity Digital Assets division, followed by the Fidelity trading app rivaling Robinhood. This July, Fidelity launched another app, Fidelity Spire, aimed at young adults to develop financial literacy thanks to its streamlined and intuitive interface.
As of June, Fidelity manages $3.3 trillion worth of assets, just behind the Swiss UBS Group, in fourth place. BlackRock still holds the first place at $7.3 trillion. Always ensuring to cover every corner of the globe, Fidelity International (FIL) masterminded the Eight Roads Ventures in 1969, a venture capital fund headquartered in Bermuda.
Fidelity Report Details the Mechanics of Bitcoin Adoption
Under the auspice of its Digital Assets division, Fidelity harnessed its vast network of financial experts to determine the relationship between Bitcoin and other assets. We noted previously that Bitcoin holds numerous features of different assets, from gold to growth stocks, which makes it difficult to pin down any direct correlation that Bitcoin shares with other assets.
Fidelity’s report gives further credence to the realization that Bitcoin’s moves cannot be predicted within any established framework. As an asset tied to the internet, Bitcoin is subsumed in the social media ecosystem. From Reddit and Twitter to TikTok, Youtube, and other platforms, Fidelity documents that these platforms drive Bitcoin’s retail (individual) adoption.
Trading Apps as Bitcoin Adoption Force Multiplier
Moreover, when big whales initiate a Bitcoin sell-off, this is far more likely to spur retail investors into buying the dip. This behavior is quite divergent from institutional investors investing in Bitcoin. On top of that, the mark of trading platforms like Robinhood and Fidelity on the financial ecosystem cannot be overstated.
As the “Portnoy Top phenomenon” attests, modern trading apps have truly democratized the markets. The top stock trading apps of today feature sleek interfaces, ease-of-use, and zero-commissions. Combine this with stimulus checks and social distancing restrictions, and we can partially explain the mass rise of retail investors, who operate under different rules. The sentiments of such investors reside within a different framework in which the sociality of partaking becomes an important factor.
Fidelity’s report confirms this by accounting for the rise of wallets with less than one BTC present. CoinShares’ Meltem Demirors further observes in the report that, just as influencers are key in the video gaming and PC hardware industry, so do influencers in the realm of social media exert greater impact than financial institutions.
In addition to Bitcoin’s gold-mimicking property, this confluence of factors creates incentives for institutional investors, which affects influencers, which then affects retail investors. However, with a hard recession ahead of us, we have yet to see if this feedback loop makes Bitcoin behave more like gold or more as equity. The rising Hodler trend may be a sign.
What do you think about the role social media influencers have on Bitcoin’s adoption? Let us know in the comments below.