Fidelity report: Bitcoin cycle is far from over, miners will stick to it

In a report on cryptoassets, Fidelity Asset Management suggested that miner movements suggest that the Bitcoin cycle has plenty of room to run.

Fidelity Digital Assets — the cryptocurrency arm of Fidelity Investments, which manages $4.2 trillion in assets, shared their "two-point view" on the future of the crypto asset space. Key takeaways relate to miner behavior and adoption of the Bitcoin (BTC) network.

In its annual report released last week, the group shared some insights into BTC mining.

“Because Bitcoin miners have the greatest economic incentive to make the best guesses about BTC adoption and value… the current Bitcoin cycle is far from over, and these miners are making long-term investments.”

The recovery of Bitcoin’s hashrate in 2021 is “really astounding,” especially considering that the world’s second-largest economy, China, banned Bitcoin in 2021, the report said. With BTC hashrate “more widely distributed around the world,” the rebound in hashrate since the ban shows miners are committed to long-term profits.

These claims dovetail with miners’ recent selling performance. Key on-chain metrics suggest that Bitcoin miners are in a “massive” BTC accumulation mode as miners show no desire to sell.

Additionally, Fidelity made some interesting predictions about more countries accepting BTC as fiat:

“There is very high-stakes game theory at play here, and if bitcoin adoption increases, countries that endorse bitcoin will have a better competitive advantage than their peers. So we wouldn’t be surprised to see other sovereigns in 2022 Acquire Bitcoin and maybe even see a central bank make an acquisition.”

Previously, a former Tongan MP said the country could adopt BTC by the end of 2022.

Essentially, more regulation and better products will open up the cryptocurrency space, "bringing a larger portion of the trillions of traditional assets into the digital asset ecosystem." Combined with miners’ long-term holding policies, Bitcoin’s bull cycle could extend and propel BTC to new highs.