Investors are hoping bitcoin becomes a "store of value" but the largest cryptocurrency is still very volatile, Tom Jessop, head of Fidelity Digital Assets (FDAS), said during the Reuters Global Investment Outlook Summit 2020 on Thursday.
“We use the words ‘potential store of value’ as bitcoin is still extremely volatile, and by any standard perhaps would not achieve the mantle of a true store of value,” said Jessop, whose company, a unit of Fidelity Investments, offers cryptocurrency trading and custody services for financial firms and corporations. His remarks were reported by Reuters.
Jessop added that while bitcoin’s volatility prevents it from acting as a reliable way to store value, “aspirationally” it could be one, and “that’s one of the reasons why so many investors are now thinking about this space constructively.”
While sharp price movements in a market can often scare investors because volatility gets conflated with risk, what’s unique about bitcoin’s volatility is that unlike the volatility index (VIX) for the S&P 500, bitcoin’s VIX tends to be positively correlated with the asset’s price.
In an October report regarding bitcoin’s market cap, FDAS noted that due to bitcoin's uncorrelated nature the crypto’s market cap has ample space to grow.
“In a world where benchmark interest rates globally are near, at or below zero, the opportunity cost of not allocating to bitcoin is higher,” the report noted.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.