Fidelity Investments is the largest 401(k) provider in the United States. Just this month, the company announced that it will be the first to offer clients exposure to Bitcoin (BTC 2.99%) through its 401(k) plans.
Fidelity has 20.4 million clients and manages nearly $2.7 trillion of assets. Now these customers can allocate a portion of their portfolio to the world's leading cryptocurrency. It's a move that most expected would eventually come but has finally arrived.
By offering retail investors exposure to Bitcoin, Fidelity has validated that this is not just some fad. Fidelity knows there is money to be made in this market. Ultimately, Fidelity's goal is to remain competitive as a 401(k) provider by offering clients new, innovative products. The company is in it for the money, like all of us. The better results it produces, the more profit it earns.
The announcement to provide clients Bitcoin exposure proves that Fidelity believes this market has untapped potential. Inevitably, other competitors of Fidelity will begin to offer similar Bitcoin exposure to their customers. Firms like Charles Schwab, Edward Jones, and Vanguard will be forced to keep up with demand or risk losing clients to Fidelity.
If this situation unfolds, it would be great news for Bitcoin investors. As more participants gain exposure to an asset, the less volatile an asset becomes. The current Bitcoin market is volatile for a number of reasons. One of them is because it is a developing asset. Volatility is a part of the maturation process as investors determine what Bitcoin's true purpose is.
An allocation of Bitcoin from tens of millions of 401(k) portfolios would be one of these purposes that helps reduce volatility. Therefore, Bitcoin could transition from a speculative, volatile investment to a reliable part of many retirement plans.
More big money on the way
To find further evidence of this movement, it can be useful to see what some of the world's largest accounting firms are doing to prepare themselves for clients wanting Bitcoin.
One of the Big Four accounting firms, KPMG, has remained at the forefront of innovation revolving around digital assets. It announced in February 2022 that its Canadian branch would be purchasing Bitcoin. The move was described as the first step to further understand digital assets so that it can eventually offer guidance to their clients.
And their clients are some of the most profitable companies in the world. KPMG manages the books for over 20% of the Fortune Global 500 companies.
KPMG Canada's Managing Partner, Benjie Thomas, summed it up best, saying, "This investment reflects our belief that institutional adoption of cryptoassets and blockchain technology will continue to grow and become a regular part of the asset mix."
Keep it simple
Microeconomic factors might not be considered favorable at the moment, but the macroeconomic outlook is fantastic. The institutions are coming, and the scale of money that will pour in has not yet been seen in Bitcoin's history.
Institutional investors have unimaginable amounts of capital. They pale in comparison to retail investors. Luckily, retail investors can follow the breadcrumbs left by the institutional giants who are preparing for Bitcoin to become a more common asset.
These new sources of funding will not be reflected in the Bitcoin price immediately. Rather, like many trends, they seem to become mainstream quickly without much notice and then stay for good. But while they take their time, retail investors can stay ahead of the game by gaining exposure to Bitcoin at prices that will likely be dwarfed in years to come.
If they are preparing themselves, so should we.