Is Fidelity Investments Following The Footsteps Of BlackRock In Crypto?

Fidelity Investments, the world’s third-largest asset manager, might be poised to make significant inroads into the cryptocurrency industry. This has come hot on the heels of BlackRock’s application for a Bitcoin spot exchange-traded fund (ETF), a move that sent ripples of optimism through the market. The recent move of Fidelity implies that the asset manager is following closely behind the steps of BlackRock.

BlackRock recently applied to launch a Bitcoin spot ETF. For your information, BlackRock is the world’s largest asset manager with a staggering $9.57 trillion in assets under management (AUM). The filing generated substantial bullish momentum in the crypto market. Experts cite BlackRock’s influential connections and its remarkable success rate with ETF applications as reasons to believe the application might be approved. To date, out of 576 applications filed with the US Securities and Exchange Commission, only one has been rejected, with 575 receiving approval.

Now, rumors suggest Fidelity Investments might be planning to follow suit. The speculation centers on the potential for Fidelity to either apply for a Bitcoin spot ETF or bid for Grayscale. For those who don’t know, Grayscale is a leading crypto asset manager currently experiencing financial difficulties. The source of these rumors appears to be Andrew Parish, co-founder of Arch Public, who suggested Fidelity was planning a “seismic move” in the crypto markets.

Fidelity Investments is certainly not new to the crypto space. With $4.283 billion in AUM, the company launched Fidelity Digital Assets (FDA) in 2018. The FDA operates as a separate branch focused on Bitcoin and other cryptocurrencies. FDA has been a pioneer in several ways, being the first company to offer investors the option of adding crypto assets to their 401(k) retirement accounts. They also introduced the Fidelity Advantage Bitcoin ETF in Canada in December 2021.

Will Fidelity Bid For Grayscale?

The prospect of Fidelity potentially bidding for Grayscale is also intriguing. Grayscale’s parent company, Digital Currency Group (DCG), has faced financial difficulties for some time, with its economic stability remaining unclear. Grayscale, considered DCG’s most profitable entity, holds over 630,000 BTC in its Bitcoin Grayscale Trust (GBTC). The company’s potential bankruptcy was regarded as a potentially catastrophic event for the crypto market. These speculations hurt the market in late 2022 and early this year. Should Fidelity rescue Grayscale and unwind GBTC’s current 36.6% discount, it could be a bullish event for Bitcoin and the broader crypto market.

BlackRock and Fidelity’s potential entrance into the Bitcoin market could lend further legitimacy to the crypto industry. Moreover, this could potentially drive up prices. Some industry experts are speculating that Bitcoin could be having its “gold moment”. After gold received its first spot ETF approval in the US in 2004, the price experienced substantial growth in the following years. Similarly, if Bitcoin can replicate this, the effect on the cryptocurrency market would be significant.

In conclusion, while these are still rumors if Fidelity does follow in the footsteps of BlackRock by introducing a Bitcoin ETF or rescuing Grayscale, it could be a defining moment in the integration of cryptocurrencies into mainstream finance. As the crypto industry continues to mature and gain recognition, we may be witnessing an increasingly blurred line between traditional finance and digital assets.