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Fidelity To Support Ethereum Trading For Institutions

Fidelity Digital Assets is adding support for Ethereum trading for institutional trading effective at the end of the month. The news comes through a widely amplified screenshot of a leaked email that was reportedly sent to the firm’s clients.

Lets take a look at what we know in the early days around this leak, with realized support for Ethereum expected to be just a week away.

Fidelity Digital Assets Makes A Big Stride

Fidelity Investments operates one of the biggest financial institution behemoths on the planet, and has shown continued investment in their digital asset division. While the perspective last year from Fidelity Digital Assets – throughout the midst of the bull market – was that institutional demand for Ethereum was not sufficient, that seems to have changed course. According to reports surrounding the leaked memo, Fidelity Digital is expected to offer Ether buying, selling and trading for institutional clients as early as October 28.

The move is surprising to some, considering the bear market conditions that have persisted this year.

Ether (ETH) trading is expected to be supported later this month for institutional clients of Fidelity Digital Assets, according to leaked memos that have been unveiled this week. | Source: ETH-USD on TradingView.com

The Building Blocks Of Institutional Investment

This announcement, however, might not be surprising to all. A survey conducted by Fidelity Digital last year that engaged financial advisors, high-net-worth investors, hedge funds, family offices, endowments and foundations, and similar businesses across the globe, found that price volatility and lack of fundamentals have been two main drivers behind skepticism around digital asset investments.

One year later, the market has found relatively stability (albeit, bear market stability) compared to years past, and there is more use cases behind Ethereum blockchain-based utility than ever before. Has that been enough for the tide to turn when it comes to institutional investment? This move from Fidelity Digital suggests so. Additional movement throughout this year has suggested Fidelity’s interest in continuing a push into digital assets, too, such as a bullish perspective in recent months from Fidelity’s Director of Macro Jurrien Timmer, and company-wide support for Bitcoin allocations in employee 401k’s. Just last week, the company continued it’s push, launching an Ethereum Index Fund.

We’ll see how institutional investment responds to Fidelity’s new offering, but regardless, it only bodes well for the big-picture future of the broader crypto landscape.

Featured image from FidelityDigitalAssets.com, Charts from TradingView.com
The writer of this content is not associated or affiliated with any of the parties mentioned in this article. This is not financial advice.
This op-ed represents the views of the author, and may not necessarily reflect the views of Bitcoinist. Bitcoinist is an advocate of creative and financial freedom alike.

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Why Is Bitcoin So Volatile, Anyway? Fidelity Digital Assets Explains

Let Fidelity take the wheel and drive you through the wonderful world of volatility. Bitcoin critics wield one of the asset’s main characteristics as an unsolvable failure, but, is it? According to Fidelity, “bitcoin is fundamentally volatile.” That doesn’t deter it from fulfilling “its ultimate investment objective of preserving wealth over long time periods.” 

Related Reading | Fidelity Says What We’ve Been Thinking: Countries & Central Banks Will Buy BTC

The company said all of that in Fidelity ‘s latest edition of “The Research Round-Up.” In their much longer analysis, they use oil and gold as examples to explain the whole volatility process. We’re in the summarizing business, though. Here at NewsBTC, we will distill their article, state the main points, and briefly comment on them.

Fidelity Explains Bitcoin’s Fixed Supply

  • “Bitcoin is unique in that it is a good whose supply is completely inelastic to changes in price. In other words, supply does not (and cannot) change in response to price.”

There will only ever be 21 million bitcoin and that’s that. With other goods, there’s a cycle. “Going back to economic principles, we know that when demand increases for a good, in the short-term the price will rise. However, the higher price then incentivizes suppliers to produce more. More supply will then bring down the price.” This doesn’t happen in bitcoin. 

  • “With bitcoin, supply cannot change regardless of what price does. Therefore, any change in demand, short-term as well as long-term, will have to be reflected by changes in price.”

It’s only logical. The laws of supply and demand can only affect the price, and so they do. “There is no change in supply to dampen the effect of price moves, even over the longer-term.” Mix that with an ever-decreasing supply of new coins, due to the halvings, and you have a perfect recipe for what bitcoiners call “number go up technology.”

Fidelity summarizes the phenomenon with a quote from Parker Lewis: 

“Bitcoin is valuable because it has a fixed supply and it is also volatile for the same reason.”

Those two characteristics come in the same package. 

BTC price chart for 03/09/2022 on FX | Source: BTC/USD on TradingView.com
Bitcoin As A Store Of Value

  • “Something that has low volatility is not necessarily a good store of value in the long run, while something that has high volatility does not mean that it can’t be a good store of value in the long run.”

It’s easy to get scared by volatility. Investors, traders, and even true believers let their feeling get in the way and exit the market with every little bump in the road. However, there’s no one that has holded bitcoin for more than four years and is in the red. Literally no one. 

Related Reading | Bitcoin Volatility Drops To 15 Month Low; What This Could Mean

Let’s get an obvious example from Fidelity, “The U.S. dollar is not volatile but has also not been a good store of value in terms of purchasing power, while bitcoin is considered very volatile, but has been a much better store of value over the past ten and even five years.”

  • “Volatility is a byproduct of price discovery, and there is no other way for price discovery to happen in a free market.”

Even though bitcoin is 13 years old, it’s still going through a price discovery process. How much is bitcoin really worth? We won’t know for years, even decades. “This process of individuals all coming to adopt bitcoin in different ways and timeframes necessarily must produce volatility,” completes Fidelity. 

Fidelity Thinks Bitcoin’s Volatility Is Decreasing

  • “The limited historical evidence we do have so far appears to be showing volatility declining over the long-term.”

Bitcoin Volatility decreasing | Source: Fidelity

The graph clearly shows that volatility is slowly fading. This is only logical. Fidelity explains, “as gold went through a major price discovery process in the 70’s, which then resulted in amassing a larger base of investors, volatility naturally declined.” We’re still early, though. This is not financial advice, but, for now, you should learn how to ride volatility and use it in your favor.

Featured Image by Chris de Tempe on Unsplash | Charts by TradingView and Fidelity