Key Points
- Bitcoin [BTC] sees recovery after significant downturn, but concerns about stagnant wallet growth persist.
- Fidelity analysts question Bitcoin’s risk-adjusted returns compared to traditional markets such as the S&P 500.
Bitcoin [BTC] is showing signs of recovery after a substantial drop in its price, which had previously fallen to a low of $78K from a peak of $109K.
Despite this recovery, there are ongoing concerns about the growth of the underlying network.
Stagnant Wallet Growth
Jurrien Timmer, the Director of Global Macro at Fidelity Investments, highlighted that the count of BTC’s wallets has seen minimal growth over the past year.
This has led to questions about whether the recent price surge is a result of organic adoption or short-term market speculation.
Timmer suggests that the stagnant growth in Bitcoin wallets is due to the approval of U.S.-based spot exchange-traded funds (ETFs) and MicroStrategy’s aggressive accumulation strategy.
According to Timmer, institutional buyers require only a few wallets to manage large holdings, which limits the apparent expansion of the network.
Bitcoin vs. Stocks
Chris Kuiper, the director of research at Fidelity Digital Assets, compared Bitcoin’s performance to traditional markets over the past four years.
While Bitcoin has seen a 17% compound annual growth rate (CAGR), the S&P 500 is not far behind at 13%.
However, when considering risk-adjusted returns, Bitcoin underperforms as investors have faced nearly four times the volatility for a slightly higher return.
This has raised further concerns about Bitcoin’s risk-reward profile, particularly for institutional investors looking for stable yet competitive investment opportunities.
Bitcoin is currently trading at $88,036.11, representing a 0.64% daily increase and a solid 4.90% weekly gain.
Its recent breakout above the $86,800 resistance on 24th March indicates renewed bullish momentum.
As Bitcoin continues to navigate market fluctuations, investors remain vigilant for signs of a sustained rally or potential corrections in the future.
