Fidelity just announced that they have enabled crypto trading services for both Bitcoin and Ethereum to their retail clients.
What does that mean?
- Fidelity has over 4.5 trillion dollars in assets under management. Trillion... with a T.
- Fidelity is the largest retirement plan provider servicing over 23,000 employers.
- Investors will be able to allocate up to 20% of their 401k to crypto investments (initially, Bitcoin or Ethereum).
This is big for two reasons:
Directly: Investors can get exposure to Bitcoin and Ethereum through "tried and true" investment vehicles. Additionally, 401ks are retirement accounts and not set up for day trading.
This means that as Bitcoin and Ethereum are purchased and allocated to an account, there are fewer chances for that crypto to be sold as markets shift. Which in turn, reduces market liquidity and makes Bitcoin and Ethereum less volatile.
Indirectly: With Fidelity offering this option to their clients, competitors like Goldman Sachs, Edward Jones, Vanguard, etc. will be pressured to provide similar services as well.
Traditional Finance (TradFi) has been sidelined for many years waiting for "proper" regulation and it seems that the industry may feel comfortable finally taking the crypto leap.
In Summary: This is BIG news for the entire crypto space in terms of adoption and increased market cap value. I think everyone should have some level of exposure to Bitcoin and for those that do not feel comfortable controlling their own private keys, leveraging their retirement accounts may be a viable option.
One concern I have, which I will be watching carefully, is making sure that these institutions are ACTUALLY buying Bitcoin and not buying claims to Bitcoin (i.e. paper Bitcoin).
Investors should own the actual asset, not a claim on the asset; so if you look into these TradFi options, keep that in mind.