Fidelity thinks that in 2022 more governments and even central banks will follow the El Salvador example and add bitcoin to their balance sheets. The multinational financial services corporation said that a high competitive game stake is in play a thing and this will lead to further adoption.
“If bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance,” Fidelity explained.
In 2021 Salvador became the first country to make bitcoin legal tender. The government started giving away free bitcoin to its citizens and making it mandatory for businesses to accept bitcoin as payment in addition to the traditional fiat currency.
At the actual price of $42k seems that the El Salvador investment is a loss of about 10 million dollars, This loss came because they bought after the surge in mid November and now the bitcoin price has declined by 40%.
Yet, China is adopting the contrary strategy by banning mining and exchanging of bitcoin and other digital currencies. That is a big mistake according to Fidelity.
“It isn’t surprising that we think an outright ban will be difficult to achieve at best, and if successful, will lead to a significant loss of wealth and opportunity,” the note said.
One achievement that can possibly give bitcoin and cryptocurrencies more weight is the late regulations targeting the industry after the inclusion of the infrastructure bill In November. However the regulations impacting crypto will not take effect until 2024, and there is potential for different amendments to the legislation until then, Fidelity noted.
“But what we think is most notable is that digital asset regulation becoming law is another milestone as the asset class comes of age and establishes itself,” Fidelity explained.
Eventually, countries that see something in bitcoin could pay now a small price to enter the game rather than wait years apt pay I higher price then.
“We therefore wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition,” Fidelity concluded.
Will we see other countries buying bitcoin in 2022? feel free to post your opinion in the comments below.