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• Fidelity Investments plans to offer a Bitcoin-based retirement plan
• Michael Saylor, CEO of MicroStrategy, enthusiastic
• Saylor thinks Bitcoin is better than stocks, bonds and the like.
Fidelity Investments, the largest retirement plan provider in the United States with $2.7 trillion in assets under management, intends to offer bitcoin as an investment option for its 401(k)d plans by mid-2022. These 401(k) plans are a model of company 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. Contributions are often co-financed by the employer and also paid directly by the latter. However, the employee decides for himself whether to invest in pension, equity or mixed funds and also bears the risk of his decision. As the first provider of pension plans, Fidelity Investments now also wants to make an investment in Bitcoin possible in the United States.
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“Bitcoin King” is excited
MicroStrategy founder and CEO Michael Saylor responded enthusiastically to Fidelity Investments’ announcement. “Bitcoin is a digital property and that makes it a perfect asset for a retirement plan,” Kitco Saylor quoted in 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,” the bitcoin fan said, adding that Fidelity Investments will fill a “considerable void ” in the market for investment products. He pointed out that 80 million Americans currently own or have owned digital assets.
MicroStrategy employees should apparently have the opportunity to save in such a Bitcoin 401(k) plan. “Offering a 401(k) plan is a technical challenge, and Fidelity accomplished that. We’re really excited to be able to offer it to our employees now,” Saylor said.
Although MicroStrategy actually specializes in business intelligence solutions, the software maker made Bitcoin a central part of its business strategy and began investing significant reserves in Bitcoin in August 2020. Since then, Saylor has referred to most of his tweets as buy recommendations for the cybercurrency, and was later dubbed “Bitcoin King” by the media.
Correlation between bitcoin and stocks
The seemingly growing correlation between crypto prices and the stock market doesn’t worry Michael Saylor either. For example, the International Monetary Fund (IMF) pointed out in January that cryptocurrencies had only shown a low correlation with major stock indices before the pandemic, but after central banks reacted to the corona crash with interest rate cuts, there was a trend the reversal started here and crypto prices and US stocks rose. This suggests that “contrary to initial assumptions, the benefits of risk diversification are limited,” the IMF warned. IMF experts even fear that negative developments in the crypto market will also be transferred to the stock market and lead to its destabilization.
However, Saylor believes this trend will reverse in the long term. As he explained of Bitcoin, “It’s not a tech stock, it’s the ultimate risk asset. Over time, over the next five to seven years, everyone will report on it,” said the MicroStrategy Boss.
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