Little more than a year ago, bitcoin’s price peaked near $20,000, and cocktail parties buzzed with talk of how so-and-so’s slacker nephew had made a killing thanks to an early investment in the cryptocurrency. After a whipsaw ride lower in 2018, bitcoin is now trading around $3,500, down more than 80% from its high.
The world’s first digital currency may get a boost soon, however, when Fidelity Investments begins providing bitcoin custody services for institutional investors.
The company, which outlined its cryptocurrency plans in October, is now looking at a March launch date for that service, Bloomberg reports, citing three anonymous sources. Fidelity plans to add custody for ether, the world’s No. 3 cryptocurrency by market cap, next, the sources said.
Big institutional investors have been leery about trading digital currencies because of security concerns. Cryptocurrency exchanges have suffered hacks, and digital coins are frequently stolen. Custody and trading services from a company with
Fidelity’s heft and reputation could assuage those worries and open up a large source of trading liquidity.
It also seems possible that the backing of a traditional financial services firm like Fidelity could prompt more clients to ask their advisors about adding cryptocurrencies to their portfolios.
Meanwhile, a new survey reveals that even with the precipitous drop in crypto prices last year, 22% of financial advisors plan to start a new allocation to crypto in client accounts or increase an existing allocation this year.
The December survey of 150 advisors (including RIAs, IBD reps, financial planners and wirehouse reps) by Bitwise Asset Management also found that 55% of advisors expect bitcoin’s price to increase over the next five years. Their mean price target for the end of 2023 is $17,571.
Noteworthy: One-third of respondents said they believed some or all of their clients are investing in cryptocurrencies outside of the advisory relationship.