2026 Midyear Crypto Outlook

JIM ARMSTRONG: Well, the first half of 2026 has kept crypto investors and those who follow this space on their toes. Put plainly, things don’t exactly look the way most people would have anticipated last summer. So what’s next?

Hey there. Welcome to the Covering Crypto Livestream. I’m Jim Armstrong with Fidelity. Thank you for joining us. Today, we’re going to take kind of a step back, as well as a step ahead, for our special midyear crypto outlook episode. We’re going to talk about what we have seen so far this year, what the data might be telling us about what’s next, and of course, what it all means to all of us as investors.

To discuss all that and to answer your questions, we have a pair of excellent guests joining us on the livestream. I’d love it if you could both just introduce yourselves real briefly, talk about the perspective you bring to the show. Denise Chisholm, longtime friend of the livestream, thanks for coming back.

DENISE CHISHOLM: It’s great to be back. So I’m Denise Chisholm. My title is director of quantitative market strategy. But I sit in equity research, which means that I try and get the right names into our diversified portfolios within equity.

That said, I’m on the crypto webcast because I look at patterns through data. So a lot of the time, I do what I do very differently from most of the rest of the research staff at Fidelity. And I use it all on a data-driven approach to try and find patterns. And even those patterns show up despite the fact that every cycle is very different this time. But the patterns you see are much more consistent and, I think, can help inform us as investors.

JIM: Love it. That is exactly why we brought you on. So thank you for coming back. We thought today, we would pair you with someone from outside of Fidelity, which brings us to Matt Walsh. You’re a founding partner at Castle Island Ventures. So if you could, Matt, just explain what your day job looks like when you’re not doing favors for the livestream and the perspective you bring to the show.

MATT WALSH: Well, it’s great to see you, Jim. Thanks for having me. So I’m a founding partner at Castle Island Ventures. We’re a venture capital firm. We invest in early-stage technology businesses, all in the blockchain technology space—so really trying to invest in the next generation of frictionless capital markets companies.

JIM: One of, I think, the most common questions we get from viewers, Matt, is, when am I going to experience crypto in my daily life? When is the blockchain going to “matter to me” on a daily basis? I don’t know exactly if this is correct, but it strikes me like that’s what you and your team are largely looking at.

MATT: That’s right. It’s a funny time to be doing this podcast or this show today because we’re at an all-time high in terms of people actually using blockchains in the United States of America. And we have some great regulatory momentum.

Obviously, a lot of people are looking at the price of Bitcoin, price of Ethereum. But if you actually look at what people are using these chains for, stablecoin adoption is rampant right now. So it’s a fascinating time to be recording the show.

JIM: Excellent. All right—lots of questions for both of you, which we will dive right into. Just a quick note for someone maybe perhaps watching the livestream today for the first time—a quick lay of the land involves telling you that we base every episode entirely on real viewer questions and answers.

And over the past 6 months, we’ve been hearing from a lot of you, viewers, with some really important questions like, well, is crypto dead, has crypto reached its limit, what’s the relationship today between crypto and the S&P 500, and what might crypto look like in a few years? How will it interact with the broader financial ecosystem?

We also always get folks on the livestream who are at all sorts of levels in their crypto journey. So if you’re brand new to crypto and, really, you’re looking to find out what it’s all about, you probably are going to hear some terms today that you’re relatively unfamiliar with. We’ll do our best to define them as we go. But I would definitely suggest for more resources, bookmark a site called Fidelity.com/LearnCrypto, Fidelity.com/LearnCrypto—tons of useful content that we’re updating all the time there, a glossary of terms if you’re looking for some definitions, as well as some great infographics, articles, videos, the livestream, lots of content on there.

JIM: Let’s dive into the midyear crypto outlook. Again, we’re going to start with what’s been happening in 2026 so far. We’ll move into where we are now from both a market and a macro perspective. And then we’re going to spend some time looking at what’s ahead, grounded in data, like Denise said, not in predictions. And we’ll talk about what investors might want to keep in mind.

Let’s start with a trio of viewer questions that came in recently. Let’s see if you can spot the theme in these questions. Howard—just a three-worder, “Crypto winter forever?” Gregory asks, “Is crypto dead?” And Louise wants to know if crypto has reached its limit for the foreseeable future.

MATT: Let’s look at the price action. You have a lot of uncertainty happening in the bitcoin market right now. The three that come to mind—number 1 would be MicroStrategy and what’s going on with that company.

They have $50 billion worth of bitcoin on the balance sheet. They have a preferred instrument. There’s a question around how much cash they have to service that preferred instrument. So definitely, something that people in the industry are talking about is: What will MicroStrategy do with their cash?

You also have the quantum threat. And that’s something that we should talk about, elliptic curve cryptography in general. What is the upgrade roadmap for the Bitcoin project? Companies like Google and Cloudflare have come out with very concrete roadmaps to address the quantum issue. And we’re not seeing that yet in the bitcoin community. Hopefully, we will.

And then third, I think, is interest rates—is just, what is the future path of rates? And I know Denise is going to have some thoughts on that. But I think these are the questions that are looming over the bitcoin market.

It’s interesting, though, because if you look at the blockchains themselves, as I said earlier, stablecoin adoption is just clearly the killer use case here. We’re seeing stablecoins settle on parity with the Visa network in terms of dollars settled per year—

JIM: Which is a ridiculous—

MATT: It’s a ridiculous number. Five years ago, if we’d told you that that was going to happen, I don’t think anyone would have believed it.

JIM: So explain, if you could, just for a minute that disconnect. Why aren’t people feeling like the volume is that big and they’re not maybe feeling like they’re seeing it in their daily lives?

MATT: Well, I think you have this thing in the United States market, at least, where the payments technology is quite good, especially compared to the rest of the world. And in a lot of ways, stablecoins are competing to be an ACH replacement or replacement for wires. And people don’t typically see those day to day. You’re using Venmo or you’re using Cash App. And so I think this technology, by and large, is underneath the hood, outside of the bitcoin use case.

JIM: Denise, I want to get you to a question that a viewer named Bobby sent in. And his question is: “If the S&P 500 is hitting all-time highs day after day, why is bitcoin struggling to reclaim $90,000?”

Now, I’ll pause just because bitcoin right now is churning in the low $60s, very low $60s. But when Bobby sent in this question barely a month or so ago, it was in the low $80s, and $90s seemed achievable. So walk us through that disconnect.

DENISE: I think data point number one is just illustrating how volatile an asset crypto is and bitcoin is. So the level of movement is three to 10 times the level of the S&P 500 from a vol perspective.

So it’s interesting. When you look at the data, I think one of the reasons why we have so many bullish investors is because they have been long-term-oriented. And this is the interesting part about bitcoin—is that you can have 75% drawdowns in a long-term uptrend. That highlights the fact that it is a very volatile asset.

But going back to the correlations and the data, I’ve said before on this webcast that the closest correlation to bitcoin specifically is the equity market. So if you look at commodities, currencies, and equities, you’d say, oh, it’s got a 0.6 to 0.8, depending on how you measure it, correlation equities.

Now, even that in and of itself doesn’t mean it explains everything. In fact, it only explains 40% to 50% of the movement of bitcoin. But there is another factor that is also positively correlated, which is bonds. And that’s the interesting part. And that’s actually a more monotonic correlation, which is kind of statistical words—

JIM: Meaning you’ve lost—

DENISE: Stair-step pattern, very consistent over time—is that the higher rates have been, the lower the odds that bitcoin is to go up, which is that negative correlation between stocks and bonds. But it’s really interesting when you look through bitcoin.

So that is one of the reasons why I think that we’ve seen the sell-off in bitcoin. At least when you look through history, that’s a really, really tight correlation of an increase in rates and a drawdown in bitcoin.

JIM: And I hear both of you kind of answering that third question we got about how and to what extent crypto—bitcoin, specifically—will fit into the larger ecosystem.

MATT: I’ve always thought about bitcoin as a venture bet on the emergence of a non-sovereign digital gold-like instrument, a non-sovereign store of value. And I say venture bet because stores of value are worth a lot more than bitcoin is today. And so we’re really in the early innings if this thesis is going to continue to play out. And I’m in the venture business. And so these companies are very volatile in general. And if you had to mark them every day, it would be pretty nerve-wracking.

JIM: Yeah, 100%.

MATT: And so I think we’re still in that early formation stage of this venture journey towards potentially a non-sovereign store of value.

JIM: So that’s where we are right now in the moment. And if Denise and Matt said anything that got your attention, please pop a question in the live chat, upvote others, and we’ll get to as many as we can. But now we’re going to pivot a little bit to where we are right now, halfway through 2026.

A couple more viewer questions that came in during registration—”Is bitcoin still highly and positively correlated with the NASDAQ? If not, why?” That was from Jonathan. And Guillermo wants to know, “Is crypto’s correlation to large-cap tech declining?” So Denise, I’m going to send these back to you. These feel like they are exactly in your wheelhouse. How would you respond?

DENISE: So is it changing? So we’ve seen a real disconnect between what is bitcoin specifically and technology stocks and the overall stock market. The question is, have we seen that before? And we have—actually, not all that often. But if we just take—back up and take crypto, or bitcoin specifically, have we seen these price declines before? Yes. They happen, actually, 10% of the time when you look at the data going back to 2013.

If you say, what happens after a decline like this, and you’re willing to look through the volatility, you usually, and these are historical averages—so they’re not predictions. But you’ve seen historically bitcoin double, 100% increase, most of the time—in fact, 100% of the time. That’s the definition of a long-term uptrend.

But to the question, is it changing now, is this sending us some sort of signal—so we have a disconnect for the first time, 50% drawdown in bitcoin. And technology is actually outperforming the S&P 500, which is up by about 10 percentage points. That’s actually fairly rare. That disconnect has only happened about 4% of the time. But it’s in 2018, 2019, 2022, 2023. Remember those times? It’s when rates have been rising.

So that is typically when you have seen the disconnect in the past. So I think that that’s important to understand right now—is that we’re not really seeing anything different than what we’ve seen historically. To me, the patterns remain the same, which is it’s too early. I would say, statistically to say crypto winter is here.

JIM: Excellent. Matt, anything you would add?

MATT: That’s a really interesting point. Historically, there has been this correlation between the NASDAQ and bitcoin. And I think it’s just as simple as think about the types of early adopters that we saw in the bitcoin space. These were the types of people that were generally into technology. They were probably more predisposed to owning high-growth tech stocks as well.

It’s been interesting to watch over the past 6 months, though, if you just look at the blockchain itself. And that’s the beautiful thing about this industry—is you can just see the data every second. And so you’re seeing these older addresses wake up. And my suspicion is that you have seen some asset rotation. People that have held bitcoin since it was $2 and decided to sell it at $100,000—it’s hard to hold something that long. And so you’ve seen the dispersion of ownership improve in the bitcoin space. And perhaps there’s some rotation there.

JIM: I’ve often said if I was lucky enough to get in at $2, I would have definitely bounced at $10,000. I’ve lost my mind. There was no way I would have hung in this long.

MATT: Right. And you’re seeing that in the data. So there’s been news stories about OTC desks facilitating these big block trades for early bitcoin addresses. And so that’s normal. And I think we’d expect to continue to see that.

JIM: Denise, anything else? I just want to linger for a minute on Guillermo’s question about the connection to traditional markets. I think that’s almost the subtext of a lot of what people are asking now. What else could you say about that correlation or connection?

DENISE: I think one of the big misnomers as—investors have is—in terms of rates in the market is that people think, well, higher rates are going to be a consistent headwind to equity markets. And actually, that’s not statistically true. If you look back to the 1950s and you said, I’m an equity market investor—let’s say that bitcoin is still related to that—I’m an equity market investor, what would I rather have, rates going up or rates going down, it’s actually rates going up.

JIM: So counterintuitive.

DENISE: Right. And the reason for that is because most of the time, not all of the time, but most of the time, higher rates are a reflection of growth, of underlying growth, not a deterrent to it. So I think that that’s important to understand.

Yes, are there exceptions? 2022 is an exception. But I think that brings me to my next point—is that higher rates aren’t usually, or I don’t think that they will be in this case, enough of a headwind to create a problem for the equity market as long as there is growth, which we’re certainly seeing in the economic data, that there is growth right now.

And the other thing is that inflation, which is another concern that would lead to higher rates—I think when you look at the data, given the fact that real incomes are now contracting for just the second time in history without people losing their jobs, that creates this fortunate limit aspect to how far inflation can run because truly, at the end of the day, and you can see this in the statistics, inflation is too much money chasing too few goods. And if you don’t have a meaningful more—amount of money, then it’s very difficult for inflation to be persistent in a runaway trajectory.

And the sweet spot for the equity market that people might be interested in is between 3% and 4% inflation, meaning that you don’t need to get back down to 2%, what might be more comfortable for a consumer. But that’s not been true for the stock market.

So if you say that you only have 15% odds when real income growth is negative of an inflation acceleration, and even that inflation acceleration is usually de minimis, then maybe inflation is not the headwind that you think. And maybe higher rates, as long as they’re a reflection of growth, is not the headwind that you think. And equities are actually fine in still the stages of a secular bull market. And maybe nothing is really different this time in crypto or bitcoin.

JIM: Wow. There’s so much to unpack there. That’s fascinating. Thank you for that. Matt, I want to hit you with a question that also came in during registration that’s a little more technical about crypto—in specific, bitcoin. Steven wants to know if bitcoin will ever become a utility chain.

MATT: It’s interesting. We’ve been talking about this for so many years in the bitcoin space. I remember when I first started looking at bitcoin, we were looking at it through the lens of a credit card disruptor. And clearly, that didn’t play out.

These days, I’d say most people see it as this venture bet on digital gold. And so I think my short answer would be I don’t think it needs to do anything in order to satisfy the objective of being a—eventually a non-sovereign store of value. Now, we get pitched a ton of projects that are building that utility on top of bitcoin. So I think it’s very possible it might happen.

JIM: So people are thinking about it. You just don’t feel it’s super likely?

MATT: People are thinking about it. People are talking about bringing the Ethereum virtual machine, the programming layer of Ethereum, onto the bitcoin network. People are talking about building Layer 2 payments technology on top of bitcoin. So it very well could happen. But I don’t think it needs to happen in order for the bitcoin investment thesis to ring true.

JIM: And do you feel like the ask is coming just because people are looking at other blockchains, like ETH, and saying, oh, I want to use my bitcoin to buy coffee?

MATT: I think that’s spot-on. So I think people are looking at this, especially on the founder side, and they’re saying, look at all of the collateral. Look at all the people that just don’t want to sell their bitcoin. But they might want to use it in a lending protocol. They might want to do some of the things that you can do on Solana and Ethereum with their bitcoin. And so that’s driving it.

JIM: Over the past few months, I would say one of the most popular questions we’ve gotten is a version or a flavor of, what’s going on in crypto, and how does it impact me as an investor? And so the question, I would say, a year ago was, oh, goodness, bitcoin’s over $100,000, tickling $125,000. Is it too late?

Today’s question seems to be a version of this one that came in from Foong during registration. In today’s market: “Is crypto investing for the long or short term?” I feel like some the subtext there is, oh, goodness, now it’s at $60,000. How should I be wrapping my brain around what to do as an investor, given where the price is?

DENISE: Yeah, I think it’s math. I think that the more volatile an asset class is, the longer your time horizon needs to be to see it through a long-term uptrend. If you think about emerging technologies, and that’s the way I think about bitcoin, specifically, if you just look at correlations, it’s not only like technology stocks, but it’s specifically like software stocks. That’s where the correlation is closest. Those emerging technologies are the most volatile assets.

To put a fine point on it, remember, Amazon, which we now use all the time, was a new company in the dotcom era and had a 95% drawdown with—I think it was 60% to 80% volatility that year and for the next decade. Now Amazon’s a mature business that has been a multi-bagger from an equity market perspective. But you had to have a long-term perspective to be able to make money in something that’s that volatile.

JIM: I think we sometimes lose sight of just how young—I don’t want to say immature—how young the asset class is.

MATT: Well, think about other asset classes. When credit default swaps came on the scene, it wasn’t a retail phenomenon. It was largely institutions that were participating in this. And so I think we’re very early, especially if you look at it through the lens of, how many global custody banks even do this today?

Can you hold your bitcoin with your global custody bank? The answer is no because they were pushed out of this from a regulatory perspective for a number of years. And so that’s changing. But I think we’ve just never seen an asset class that has been retail-driven in the same way that bitcoin is. And so I think we’re in the very early stages of this.

JIM: All right. You’ve walked us perfectly into the third part of our conversation, which is where we could be headed next. Where might crypto be moving for the rest of ‘26 and beyond? We have lots of questions like these two, one from Mitchell asking us where we see crypto by 2030, giving us a specific date. He threw in a second question there. Will stablecoins consolidate?

And then another question from Kyle is, how do we see upcoming global regulations affecting decentralization? So those are two biggies.

MATT: I think what we are seeing is a major overhaul. And I think a lot of it is regulatory-driven. There are a lot of technologies right now that are pushing the financial system forward in a way that it just has not been pushed forward in 20 to 30 years.

If you think about the legacy systems of a lot of these big financial firms, they’re still on mainframes. They’re still on COBOL. We’re moving to frictionless capital markets of 24/7 trading, global access, the ability to hold your own funds, the ability to settle peer-to-peer. So I think it’ll take a while. But it’s clearly in motion.

JIM: Perfect. You started to answer some of Kyle’s question there about regulations. But let’s revisit that, where we think it will be in 2030, stablecoin consolidation, and in general, regulations.

MATT: Stablecoin consolidation is such an interesting one because for those who are not following this every day, a stablecoin is essentially—under the new GENIUS Act, it is a tokenized government money market fund, essentially. And so if you think about that, how many do we really need, you would think that this would consolidate.

But I think that the financial incentives of the issuers will lead us to have a lot of different attempts. And so I think it’s quite possible over the next few years that we’ll see this balkanized landscape and probably some interoperability companies emerging that facilitate the movement between different stablecoins. And eventually, we’ll see a consolidation. But I think it’s a land grab right now. I think a lot of financial services firms would like to be the winner.

JIM: Right. And I think a lot of people are starting to hear about stablecoins and seeing big-box stores potentially talking about offering their own brands, offering their own. And it’s a little bit hard, maybe, to wrap your brain around how will I, as a retail consumer, interact with them through that framework.

MATT: And if you’re a big brand, if you’re—you run stores, for instance, why wouldn’t you give it a shot? Why wouldn’t you try to capture some of that net interest income from a stablecoin with the belief that maybe your customers would want to hold an account with you?

JIM: And Denise, back to you, I want to hit you with a twofer there. So you said niche. Why niche, given the recent momentum? And how does that impact your look at what crypto—the role it could play in 2030?

DENISE: I think it’s so long to be mature.

JIM: Even four more years, you feel like?

DENISE: Yeah, yeah. I think niche assets stay in niche mode for a very, very long time before maturity. So I guess it’s more just the use case, not that there’s not underlying growth in terms of use cases between now and 2030. I just think it will still be considered a niche asset.

JIM: And if the question had been 2060, maybe you would have had a slightly different answer.

DENISE: Yeah.

JIM: We’ve got a trio of questions now that, again, are headed right to you, Denise.

DENISE: Great.

JIM: What’s the future of crypto in banking? How will it impact fiat? We get a lot of these questions. Caitlyn is asking if we think cryptocurrency will become the world currency, rendering the dollar useless. That’s bold, but interesting. And Anthony is going for a slightly softer tone. What do we think the future of crypto will look like? No crystal balls, no predictions. And what do you think?

DENISE: We can look at the data. And it hasn’t been correlated to the dollar at all. It’s correlated to stocks, and sometimes bonds, especially during large interest rates rise. But it’s more of a high-beta play on emerging technology than anything else. And I think when you look at the data, if you examine the narrative of, is there an underlying use case for bitcoin that is opposite of the dollar, then you would theoretically see something like the—as use of bitcoin goes up, you would see use of the dollar or desire for the dollar go down.

We have the tick data for that. It looks at foreign ownership of dollar of US Treasury assets. And it’s still higher. Despite the fact that we all want to think that it might be different this time, so far, there’s no evidence of that in the actual data.

And even despite the fact that central banks are buying gold—more gold than dollars, even if you net out central banks and look at all retail investors and look at all countries and add it all together, there’s still more Treasury buyers than sellers. So I think at the end of the day, the concept of having to have it be opposite of any fiat currency might not be the accurate way to think about the roadmap. I think it might be more related to the dollar than anything else, meaning that it’s the financial underpinning of what is fiat currency. So they don’t necessarily have to be opposed to each other.

JIM: Not the zero-sum that a lot of people—

DENISE: Correct.

JIM: The questions tend to get framed that way.

DENISE: Correct. And so far, you’re not seeing any of the zero-sum in the correlations, either.

JIM: Matt, what do you think?

MATT: I see bitcoin more in competition eventually with gold, with other stores of value, like fine art, perhaps real estate. I don’t see bitcoin overtaking fiat currencies in terms of a transactional mechanism.

In fact, I see this technology perhaps advancing the dollar as the apex predator of global currencies in pushing the dollar further into other countries. I think that’s what you actually see in the data in the stablecoin market, where if you took all of the stablecoin issuers as a cohort and you just added up the number of government bonds that they hold, it would be the 14th largest country in the world right now as a stablecoin issuer.

And so I think we’ll probably end up seeing this spontaneous dollarization happen in countries outside the US. And so in a lot of ways, the story that early bitcoiners were telling themselves about bitcoin displacing fiat currencies—it will be the dollar via blockchain rails that displace those other currencies.

JIM: So is it the opposite of zero-sum bullish on both the dollar and bullish on bitcoin?

MATT: Oh, I think those are not incompatible views whatsoever. And that’s a big reason, I think, why this stablecoin bill was so bipartisan—is from the US perspective, this is a great technology. This allows us to proliferate the dollar at mass scale 24/7. Anyone in the world with a smartphone can now hold a dollar.

JIM: Super hard, as always, to say exactly what’s coming next, but really, really great to have that historical perspective, and again, referencing the data to help prove your points. Again, if you’re watching right now, just remember there’s—of course, there’s no way to predict what’s next. So before investing, we always suggest you do as much research as you possibly can. Continue to stay informed.

As we’ve suggested today, things move fast in the crypto space. So you’re never exactly done learning. And to help you continue that learning, we’ve got a fantastic library of many great resources. Again, Fidelity.com/Crypto is a good, good URL to bookmark. You’ll find that crypto glossary, more timely market insights, on-demand versions of the livestream, and a lot of other great assets, as well, that you can link to to continue your educational journey.

All right. We have covered a lot, looked at the past few months briefly, looked ahead at the next few months briefly. Live questions are coming up next. But before we do, I want to throw a couple more questions your way about what’s top of mind for both of you in the next 6 months. What do you think will make headlines? What do you anticipate will have our attention in September, October, November, or maybe a bit beyond?

DENISE: Well, I think the correlations between bitcoin and technology. And that’s definitely one of the things to watch in terms of what could be different this time. So far, like I said, everything is—it’s not different this time, or it’s not meaningfully different this time, to negate any kind of long-term uptrend.

JIM: And Matt?

MATT: Jim, I’m going to go out on a limb here and say that you will be doing a future episode about quantum computing.

JIM: Oh, you mentioned that off the top. Yeah, yeah, yeah.

MATT: And I really think that this is something that we should all be keyed in on. And so quantum computing has the ability to break elliptic curve cryptography. It’s just a matter of when, in my mind.

And so this is a fascinating week to be doing this episode because on Monday, there were a series of executive orders from the White House about quantum computing. One of them said that the US government endeavors to build a quantum computer by 2028.

Another one directed every agency of the US federal government to upgrade to post-quantum cryptography by the year 2031. And so what should you be doing as an organization? You should have a plan to migrate. And the great thing about centralized organizations is they have CEOs that can dictate that plan.

JIM: By definition, we have a problem.

MATT: By definition, we won’t have that in the open source blockchain world. And so there are a lot of benefits to being decentralized. But command-and-control product governance is not one of them. And so we’ve seen the Ethereum Foundation come out with a very concrete plan.

We have yet to see that out of Bitcoin. I think we will. And the good news is that post-quantum cryptography exists. So this is not an existential problem. This is only existential if there is inaction. And I think we’ll be talking a lot about, what’s the timeline?

JIM: I think you can expect an invitation from us then. If we do the quantum show, can you come back?

MATT: I’d be happy to come.

JIM: All right. We’re going to move on to our live Q&A right now. I see a ton of great questions coming in. So thank you for that.

All right. Matt, I feel like this one’s you. We get it a lot. Mark wants to know, what value does crypto provide? You could do six hours on that, I’m quite confident. But let’s say Mark finds you at a cocktail party and is like, I just don’t see it. What does it do?

MATT: Look, let’s talk about bitcoin specifically. What value does bitcoin provide? It provides you the option to hold a potential store of value asset self-custodially. And so it allows you to, essentially, take that bar of gold, but in a digital format, and to preserve your own wealth in that way.

Now, I could answer the question from another angle, which is more on the capital markets side—is what is the value of this technology? And I would say peer-to-peer settlement for things like dollars—eventually, for tokenized securities. That will become a big theme over the next couple of years.

So I think it depends on what you’re talking about within the crypto landscape, bitcoin more of a store of value. Other things, like dollars and securities—this is going to be a cost savings measure. And it’s going to be a way for asset management firms to provide better services to their customers.

JIM: I feel like that might be a question that’s also better answered in half a dozen years or so. I think people are really itchy and anxious to see it in their daily lives. Again, it’s Satoshi’s vision for bitcoin that I would pay for a cup of coffee with my bitcoin.

MATT: Well, and certainly outside the US, in hyperinflationary countries, you would already have an answer to this question. And bitcoin, in some of these countries, is just allowing you an exit valve out of your local fiat currency. In the US, we have a strong dollar. We have strong rule of law. But I think it’s no surprise that early adoption for cryptocurrencies has happened a lot outside the US.

JIM: Denise, a macro question for you, a really timely one talking about IPOs—IPOs hitting the equity market—Pulin is the question-asker—given high-value IPOs hitting the equity market this year, will there be enough liquidity left over for crypto growth? Is that a zero-sum? There’s only so many dollars that people want to do in alternative investments or “risky investments.”

DENISE: Right. The data that people are afraid of with IPOs is that euphoria. So if you rebase IPOs and look at it as total issuance—and remember, the IPOs that are coming to market—only a small percentage will actually be float. So if you rebase that relative to history and say, what’s coming to market, let’s make it all relative to the market cap of the S&P 500 or the Russell 3000, you will see that we’re not nearly as extended as we were even in 2022 IPO issuance and in the dotcom bubble.

So right now, we’re not seeing anything that, at least historically, can’t be absorbed. And I’m not seeing any kind of signs that are euphoric in the same way.

Now, even euphoria, when you look at sentiment indicators, don’t always necessarily mean that the market will go lower. It just usually means—sentiment indicators are very asymmetrical, meaning bullish sentiment is not always a bad thing. But bearish sentiment is always a good thing that you want to take the other side of. But we’re not seeing any euphoria in IPOs. And I don’t think that there’s enough issuance to say that it wouldn’t be absorbed by capital markets.

JIM: Matt, anything you would add to that?

MATT: So we’ve talked about bitcoin as this venture bet. Venture bets are typically not liquid. And so the interesting thing about bitcoin is that it is liquid in a 24/7 manner. And so I’m glad to hear those statistics. But I would say that if we’re worried about rotation, bitcoin is large. It’s liquid. And there is that possibility.

JIM: Andrew’s got another question that I’m going to send your way, Matt. Can we talk more about utility-based blockchains and tokens? So again, I think the subtext there is, how does this thing work? When do I see it in my life?

MATT: Well, I remember the early days, where we would get pitched a lot of these payments coins. And so the thesis for a lot of these new chains was, we’ll use this new coin to effectuate a movement of money. And I think stablecoins have really eaten that use case. And so I don’t see a huge benefit for an alternative cryptocurrency that is just good for payments.

Now, I do think that we’ll have a lot of smart contract platforms. I would put those more in the bucket of decentralized operating systems, decentralized forms of Linux, but that have community ownership. And I think there’s a time and a place for those. And certainly, a lot of stablecoins are built on top of those type of systems because they’re just easier to program in.

So I would look at it through the lens of, what will be the winning blockchains for stablecoins, what will be the winning blockchains for tokenized securities, and then bitcoin very much in a different category.

JIM: So a simultaneously broader and deeper ecosystem—

MATT: I think that’s right. I think we will have many, many blockchains. I don’t necessarily think we’ll have many that compete at the market cap of bitcoin, though.

JIM: Got it. Great. Denise, David has a question for you. He’s asking if crypto remotely follows traditional “technical analysis” with conventional securities?

DENISE: Yes. In fact, I actually give a presentation every month to our asset management. And I co-present with my colleague, Roy Justice, who is a CMT, who does do technical analysis on bitcoin and says the same thing that I’ve said statistically, which is to say it’s a long-term uptrend with a very volatile price pattern. But the long-term uptrend—even though it bends from parabolic to each time bitcoin goes up, it goes up by less because it’s becoming a mature asset—but still, that long-term uptrend is intact.

JIM: Tammy has a question that I’d love for both of you to take a swing at, if you could. What effect do you expect regulations to have on the remainder of 2026?

DENISE: That’s more Matt.

MATT: This is a big, big story right now. So we had the GENIUS Act passing last year. And that made stablecoins effectively legal in the US for the first time, which was a great outcome.

The next one to keep an eye on is the CLARITY Act. And so CLARITY Act will give definitional clarity on whether or not a token is a security or a commodity. And it will give rise to this whole new industry around tokenized equities, tokenized funds, tokenized real-world assets.

That is a market structure that has been begging to exist in the US market for the past five years. And for the first time, if we get this bill passed, or if we get SEC rulemaking in the event that it doesn’t pass, we will have that burgeoning new ecosystem, which is super exciting. So I think regulation is top of the list in terms of things that people in the venture community certainly are looking at.

JIM: Great. That’s a nice, specific answer. How about a more historic answer? And generally speaking, I feel like this is super simplified. More regulation is good, right? It’s rules of the road. Is that too simplified?

DENISE: It is. I think you have to be a little careful in terms of how volatile the asset class is in terms of buy the rumor, sell the news. We see this all the time within equities, like, oh, you got the good news you were waiting for. How did we have a sell-off? And that happens all the time.

I think, yes, it is good in the sense that it gives it higher odds to be a more mature asset class, which sustains a long-term uptrend. But I wouldn’t expect it to be correlated with any six-month price change.

JIM: Got it. Dan’s got a question that I’m going to paraphrase here. Generally speaking, he wants us to explain how AI demand may or may not impact crypto. We get questions like that once in a while. How should people be thinking? How much overlap is that Venn diagram?

MATT: A lot of people are focused on agentic payments. And so I think that’s a big question. Will stablecoins be the foundational way that AI agents pay each other, or will that be some Web2 payments technology? And you could see a strong rationale, I think, for a stablecoin being a basis for a machine-to-machine payment to make an API call. So that’s a space that’s certainly—if you look at just the density of new companies getting off the ground, it’s a very, very hot category.

JIM: So complementary there, in some ways?

MATT: I think so. And I think it all comes down to, what is the currency that the payment will be made in? And then what is the underlying foundational infrastructure for the payment? And so it stands to reason, I think, that you will have payments being made in dollars, perhaps other cryptocurrencies, but certainly dollars.

And then I think the question is, what benefit is there to a stablecoin? Is stablecoin 24/7/365, you can make a microtransaction? I think there’s some real benefits versus a credit card.

JIM: Microtransactions are fascinating to me. I could go down a rabbit hole there. But that idea that you could pay a nickel for something to keep reading an article online—that’s easily done with stablecoins, impossible to do with a credit card.

MATT: Yeah, and there’s this saying that all the good ideas eventually happen. It’s just a matter of time. And so how many times did we talk about microtransactions in the context of an alternative cryptocurrency project 10 years ago? And they were all good ideas. It was just the wrong technology at that time. And I think it’s quite possible that stablecoins will be living that promise.

JIM: Marco has a question, Denise, looks like—looking for some clarity. Is crypto more like equities or more like a commodity?

DENISE: More like equities, hands down, really little relation to a commodity yet. Again, I’m looking at the past. But yes, when you look at the equity relationship, it’s been strong, very strong, over time. That’s the most consistent of all. If you look at equities, if you look at bonds, if you look at commodities, if you look at currencies, the number one correlation is to equities. And it looks more like technology and software within that equity component.

JIM: Why do you think the tendency to lump it in with commodities—we get versions of that question a lot.

DENISE: Digital gold. It’s the relationship that I think everybody maybe hopes for, which is that it will someday become digital gold. So far, I think you just don’t see it in the data is what I’m saying.

JIM: Matt, another question for you, a flavor of which we get a lot, even way off-cycle—explain the bitcoin halving and what it means for performance specifically.

MATT: And so we’ve gotten to the four-year cycle argument, which is something that a lot of people in the industry talk about. So every 4 years, the emission schedule of bitcoin changes. And it reduces by half. And historically, that is correlated with the price of bitcoin going up over time.

And so we will be entering a halving cycle about 2 years from now, if I’m not mistaken. So it’s just something that’s pre-programmed into bitcoin. It makes it very much like a commodity, in a lot of ways. So you have this fixed supply behavior.

JIM: But no real performance, per se? It changes the speed or the rate at which new bitcoins are introduced into the ecosystem. But that’s—

MATT: It has zero impact on the underlying technology and how bitcoin works. It is purely a monetary supply phenomenon.

DENISE: Supply and demand.

JIM: And William wants to know, is ETH in a long-term uptrend with high volatility, like bitcoin?

MATT: Well, it comes down to, what is ETH trying to be? Is it trying to be this alternative to this digital gold story that bitcoin is pushing, or is it a decentralized operating system upon which you should build a lot of financial infrastructure, issue securities, issue all types of stablecoins?

And I think if you asked 10 people in the Ethereum community, you’d probably have five people on each side, honestly. So I think it needs to decide what it wants to be. Is it competing to be this digital commodity, or is it competing to be this technology layer for the future of financial services?

JIM: Excellent. You guys did amazing. That was a rapid-fire, non-stop list of questions. And I appreciate your time. Thank you, again, for being with us today.

DENISE: Very welcome.

MATT: Thanks for having us.

JIM: For sure. Again, to our live viewers, thank you for spending time with us as well. If we didn’t get to answer all of your questions here live, I promise you we’ve captured them.

They’re written down. We have them. And they’ll certainly inform future episodes. You may see them show up as part of the conversation in future episodes. So thank you for engaging with them. And we hope to see you again next time, where you can see your question, perhaps, being asked.

If you have some immediate questions that you want help with right now, I would definitely invite you to join the conversation at our Reddit. It’s r/FidelityInvestments. There’s an amazing, really kind, actually, team of people there supporting a big, big community of people asking and answering questions. So check out our presence on Reddit and get your question asked and answered there.

On behalf of everybody behind the scenes here at the Covering Crypto Livestream, thank you again for being with us. And we hope to see you again real soon.