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• Fidelity Investments plans to offer Bitcoin-based pension plan
• Excited MicroStrategy CEO Michael Saylor
• Saylor thinks Bitcoin is better than stocks, bonds and the like.
Fidelity Investments, the largest US pension plan provider with $2.7 trillion in assets under management, intends to offer bitcoin as an investment option for its 401(k) plans by mid-2022. These 401(k) plans are a model of corporate pension plans in the United States. This allows employees to voluntarily deposit a portion of their monthly earnings into a 401(k) account with a private investment company. The contributions are often co-financed by the employer and paid directly by them. However, the employee decides for himself whether he invests in pension, equity or mixed funds, for example, and also bears the risk of his decision. As the first pension plan provider, Fidelity Investments now also wants to make an investment in Bitcoin possible in the USA.
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“Bitcoin King” is excited
MicroStrategy Founder and CEO Michael Saylor responded enthusiastically to Fidelity Investments’ announcement. “Bitcoin is digital property and that makes it a perfect asset for a pension plan,” Kitco quoted Saylor from an interview with US broadcaster “CNBC”. “It’s less risky than bonds, than stocks, than commercial real estate, than gold. It’s basically made for that,” said the Bitcoin fan, adding that Fidelity Investments will fill a “considerable vacuum” in the investment products market. He pointed out that 80 million Americans currently own or have owned digital assets.
The MicroStrategy employees should apparently be given the opportunity to save in such a Bitcoin 401(k) plan. “Offering a 401(k) plan is a technical challenge, and Fidelity has achieved this. We’re really excited to now be able to offer this to our employees,” said Saylor.
Although MicroStrategy actually specializes in business intelligence solutions, the software manufacturer has made Bitcoin a central part of its corporate strategy and began investing significant reserves in Bitcoin in August 2020. Since then, Saylor has labeled most of his tweets as a buy recommendation for the cybercurrency, and has subsequently been dubbed “Bitcoin King” by the media.
Correlation between bitcoin and stocks
The apparently increasing correlation between crypto prices and the stock market does not worry Michael Saylor either. For example, the International Monetary Fund (IMF) pointed out in January that cryptocurrencies had only shown a low correlation with the major stock indices before the pandemic, but after the central banks reacted to the corona crash with interest rate cuts, there was a trend reversal here started and both crypto courses and US stocks have risen. This suggests that “contrary to initial assumptions, the benefits of risk diversification are limited,” the IMF warned. The IMF experts even fear that negative developments on the crypto market could also be transferred to the stock market and lead to its destabilization.
However, Saylor believes this trend will reverse in the long run. As he explained regarding Bitcoin, “It’s not a tech stock, it’s the ultimate risk-off asset. Over time, over the next five to seven years, everyone will realize that,” said the MicroStrategy Boss.
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