Why Bitcoin Can Be A Potential Insurance To The Financial Crisis: Report

Zinger Key Points
  • Fidelity Digital Assets issues a report, “The Rising Dollar and Bitcoin.”
  • Fidelity Digital Assets states no counterparty risk and liability is what sets Bitcoin apart.

In the near future, Bitcoin BTC/USD may stand in stark contrast to the course that the rest of the world and fiat currencies may pursue, particularly the one of increasing supply, extra currency creation and central bank balance sheet growth, according to Fidelity Digital Assets.

In the report “The Rising Dollar and Bitcoin,” the asset management firm cited an example of the U.K., stating that the central bank is tightening to try to fight decades-high inflation while encountering market stress which requires more liquidity to tamp down financial volatility and keep it from spreading.

U.K. Investors Realizing Bitcoin’s Potential

“Some U.K. investors or traders may have already noticed Bitcoin’s potential to opt out of the current situation as trading volumes between the British pound and bitcoin spiked to a record high,” Fidelity Digital Assets wrote.

Also Read: Is Ethereum's Reliance On Centralized Servers Problematic? Why The Trend Is Concerning

The report added that the Federal Reserve may face pressure to soon reverse its tightening monetary policies as a result of the damage the U.S. currency is causing to other nations, which has precedent based on 1985’s Plaza Accord.

The huge debt loads in developed countries may also need further debasement of the currency, and recent events in the U.K. have highlighted the systemic counterparty and liability risks, necessitating monetary intervention and injections of liquidity that are unlikely to go anytime soon, according to Fidelity Digital Assets.

Bitcoin Does Not Correspond To Another Person’s Liability

“Comparatively, Bitcoin remains one of the few assets that does not correspond to another person’s liability, has no counterparty risk and has a supply schedule that cannot be changed. Whether those properties begin to look more attractive is ultimately up to investors and the market to decide,” Fidelity Digital Assets stated.

Next: Fidelity Investments Delves Into Crypto, Deepens Bench With Fresh Hires

Photo: PlutusART via Shutterstock

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