Bitcoin is still driven by the ‘digital gold narrative’ among institutional clients who see it as a hedge against inflation, Fidelity’s digital assets president says

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  • Institutional investment in bitcoin is still driven by the “digital gold” narrative, according to Tom Jessop.
  • Jessop, Fidelity’s digital assets president, said his clients are worried about monetary inflation and see bitcoin as a hedge.
  • Bitcoin is also viewed as a “long-dated call option on the use of the asset or the technology as a means of payment.”
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Bitcoin is still driven by the “digital gold narrative” among institutional investors who see the digital asset as a way to hedge against inflation, according to Tom Jessop, Fidelity’s digital assets president.

In an interview with CNBC on Tuesday, Jessop was asked which narrative surrounding bitcoin is the most popular with institutional investors.

The digital assets president said: “I would say the predominant narrative at this point is still the digital gold narrative which really started driving the market higher about a year ago after the pandemic.”

He added: “There are a number of clients that are concerned about the fiscal and monetary stimulus, monetary inflation, and they see a scarce digital asset like bitcoin, specifically, being an important part of that thesis.”

Bitcoin’s scarcity and potential to hedge against inflation are key reasons institutions are taking an interest in the asset, according to Fidelity’s digital assets president, but they aren’t the only ones.

In his interview, Jessop explained how a growing number of institutional investors are looking at bitcoin “from an asset allocation standpoint” due to its lack of correlation with other assets over longer periods of time.

Jessop also said that bitcoin is seen as a “network effect opportunity” by some institutional clients. He explained that a portion of his clientele views the digital asset as a “long-dated call option on the use of the asset or the technology as a means of payment.”

Fidelity’s digital assets president went on to say that he believes bitcoin’s recent boom and bust cycles “are part of the maturation of bitcoin as an asset class.”

Jessop also echoed comments from other crypto analysts who have called bitcoin’s recent fall a result of massive leverage unwinding.

“In some cases, we touched close to $30 billion of leverage driving prices higher, and in many cases, these investors can trade on 50 to 100 times leverageā€¦in the subsequent weeks that leverage has come down significantly, in some cases by two thirds,” Jessop said.

The digital assets president added that this de-leveraging process can be viewed as a “cleansing” for the ecosystem and that he expects with “basing” and “positive news flow,” bitcoin and other cryptocurrencies will begin to stabilize.

Read more: Financial researcher Nik Bhatia explains why asset managers with a growth focus could be violating their fiduciary duty if they don’t consider bitcoin – and compares the crypto to Amazon’s stock 20 years ago

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Palantir says it accepts bitcoin as payment and has mulled adding the cryptocurrency to its balance sheet

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Palantir logo on the New York Stock Exchange.

  • Palantir turned in its first-quarter earnings report on Monday, showing revenues surged 49% year-over-year.
  • In the company’s conference call, CFO David Glazer revealed Palantir accepts bitcoin as payment and has considered adding the cryptocurrency to its balance sheet.
  • “The short answer is yes, we’re thinking about it…In terms of accepting Bitcoin from our customers, we do accept it,” Glazer said.
  • See more stories on Insider’s business page.

Palantir released its first-quarter earnings report on Monday and there were a few standout comments in the company’s follow-up conference call.

Palantir’s chief financial officer and treasurer David Glazer was asked about bitcoin as a payment method and the possibility of adding cryptocurrency to the firm’s balance sheet.

Glazer said that not only has Palantir been considering adding bitcoin to its balance sheet, it also accepts the cryptocurrency as a form of payment from customers.

“Thanks for the question. The short answer is yes, we’re thinking about it and we’re even discussing this early, taking a look at our balance sheet in cash at quarter-end, including $151 million in adjusted free cash flow in Q1. So, it’s definitely on the table from a treasury perspective as well as other investments that we look across our business and beyond,” Glazer said.

“On the other side of that, in terms of accepting Bitcoin from our customers, we do accept it,” the CFO added.

Palantir turned in revenue of $341 million vs. analyst expectations for $332.2 million in the first quarter, while adjusted earnings per share hit $0.04, matching analyst estimates.

The big data company also reaffirmed that it expects annual revenue growth of +30% for the next four years.

The stock traded down 1.79%, recovering from a premarket drop, as of 9:31 a.m. ET on Tuesday.

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