Inside Fidelity's 'Get Off Zero' Bitcoin Report | Chris Kuiper

This week was the worst sentiment Chris Kuiper has seen across nearly five years at Fidelity Digital Assets and more than a decade studying Bitcoin. The unusual part is that nothing is obviously broken. There is no FTX. No catastrophic catalyst. Just narratives quietly shifting, AI taking the momentum bid, and Bitcoin sitting flat while everything else rips. And yet the case for getting off zero just got delivered with more force than ever, from inside one of the largest financial institutions on Wall Street.

On this week's episode of The Last Trade, we sat down with Chris Kuiper, VP of Research at Fidelity Digital Assets, to discuss why this is the most unusual bad-sentiment cycle he has seen, the central argument of Fidelity's relaunched Getting Off Zero report, the mean-variance math that lands at a 10% Bitcoin allocation funded from bonds, why bondholders are roughly 30% underwater on a real basis, how the institutional excuses have shifted from philosophical to operational, and the central-bank adoption arc already underway.

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This is the worst sentiment Chris has seen, and that's the unusual part

• Chris has been studying Bitcoin since 2012 and at Fidelity Digital Assets for nearly five years. Past bad sentiment had obvious catalysts. FTX, broken products, clear catastrophes. This one is different. Nothing big is obviously broken, which makes it harder to point at.
• The closest thing to a fundamental concern is the narrative layer. Quantum FUD, the soft-fork and hard-fork back-and-forth, and the "gold is back and we don't need Bitcoin anymore" thesis gaining momentum. None of these are catastrophic. Together they crowd the airwaves.
• The bigger story is where the momentum actually went. AI, semis, memory chips, and even old-guard names like Dell and IBM are catching the momentum bid. People only have so many dollars and only so many narratives they can hold in their head, and right now neither is in Bitcoin.
• Chris's read on it is the silver lining. Bitcoin is finally decoupling. Maybe not the decoupling everyone wanted, but the one allocators deserve. An asset that goes up with everything at the same time isn't actually doing the diversification job.
• Brian's reinforcement: Bitcoin spends roughly 96 to 97% of trading days sideways or down. If you miss the five or ten best days, you forfeit most of the return. That return profile is the entire reason a long time horizon matters more for Bitcoin than for almost any other asset.

Investor takeaway When the worst sentiment doesn't come with a broken catalyst, you are looking at the textbook conditions for a bottom, not a structural problem.

"Get Off Zero" reframes a zero allocation as a position you have to defend

• Fidelity Digital Assets relaunched its Getting Off Zero report this year. The original ran years ago. The new version is updated, simplified, and re-aimed at 2026. The central frame: Fidelity isn't telling institutions they must hold Bitcoin. It is telling them they need a good reason if they don't.
• The pitch is built around the boxes Bitcoin ticks: return versus risk, diversification, the qualities institutions look for in a traditional alternatives sleeve. Bitcoin has the pros of alts and improves on most of the cons. That alone is enough to deserve a real evaluation.
• The first-principles thesis is unchanged: a hedge against monetary debasement, with consumer-price inflation as a byproduct, plus diversification, plus higher risk-adjusted returns. What's new is the institutional infrastructure to actually act on it.
• As Bitcoin grows into world benchmarks, a zero weight stops being a neutral stance. Chris put it directly: a zero weight is effectively a short position, because you aren't even taking the market-weight neutral allocation. That is a different conversation than "I don't want to own it."
• Michael's reframe was the meme version of the same point. Not having a position in 2026 is having a position, whether you admit it or not. That is now a fiduciary question, not a philosophical one.

Investor takeaway The bar for a zero allocation just moved from "you can say no" to "you have to explain why," and once benchmarks include Bitcoin that shift is irreversible.

The mean-variance math landed at 10% Bitcoin, 0% bonds

• The report runs a mean-variance optimization with deliberately conservative Bitcoin assumptions. Chris cut Bitcoin's expected return from its trailing ~70-75% CAGR all the way down to 25%, while only modestly reducing volatility from its trailing ~60-70% down to 50%. That's a heavy haircut on returns and a light one on risk.
• Equities got the benefit of the doubt. The model used the trailing 10-year stock return of 14.5%, one of the best equity decades on record, at 15.5% volatility. Bonds came in at 2% return and 5% volatility, which is generous after the past few years.
• A standard 60/40 portfolio under these assumptions produces a 9.5% expected return at roughly 10% volatility, for a Sharpe ratio of 0.58. That is the baseline most institutional allocators are working from today.
• The Sharpe-maximizing portfolio under the same assumptions: 90% stocks, 10% Bitcoin, 0% bonds. Expected return jumps to 15.5%, volatility rises to 16%, and the Sharpe ratio improves from 0.58 to 0.73.
• The point isn't that 10% is the right number. The point is that under a deliberately punitive Bitcoin assumption set, the math still says you want some, and the conventional bond allocation does more damage than help.

Investor takeaway Under conservative assumptions, a 10% Bitcoin allocation funded from bonds is the higher-Sharpe portfolio. That isn't a thesis. It is the output of the same model 60/40 sits on top of.

Bondholders are 30% underwater on a real basis

• The chart everyone in the report should be staring at: 10-year Treasury drawdowns, nominal versus real. Nominal looks fine. Real looks catastrophic.
• From roughly the late 1930s through the mid-1980s, real returns on the 10-year were negative 30% to negative 50% in any given year. Forty years underwater. The era institutional fixed-income frameworks were built on top of was the worst real-return stretch in modern bond history.
• We are back there. Real yields are negative across the one-month, three-month, six-month, and arguably the one-year, with inflation running near 3.8%. Bondholders are roughly 30% underwater on a real basis right now.
• The trick the nominal-only frame plays is exactly the trick that gets retirees in trouble. Shallow nominal drawdowns feel like stability. Then the inflation print comes in hot and the purchasing power you thought you had is gone.
• Chris's structural call from the prior year still holds. The Fed has to let inflation run hot because federal interest expense is near $1.4 trillion. The IMF playbook for highly indebted countries reduces to three options: raise taxes, cut spending, or inflate the debt away. Negative real yields is door number three, in progress.

Investor takeaway The "safe" leg of a 60/40 portfolio is the most expensive position most allocators are holding right now. The drawdown is just denominated in something they don't measure.

The excuses are getting more sophisticated. The answer hasn't changed.

• When Chris started at Fidelity five years ago, the institutional excuses were openly bad: "it's a fad," "it's a Ponzi," "it's beanie babies," "it's only for illegal activity." Those still surface, but they aren't the dominant ones anymore.
• The new excuses are operational and compliance-flavored. "I don't know about the security." "I'm not sure about correlation." "I don't know how to hold it inside our current structure." The questions have moved from philosophical to logistical. That is real progress.
• Some are unimproved. Chris recounted a pension event where one attendee said with a straight face that he would rather own art. He could touch art. That is still a real bucket of holdouts, and it skews generational.
• Even the family offices that say they have "crypto exposure" mostly mean structured funds or VC vehicles. Picks and shovels. The bias is to outsource the decision and spread the perceived risk across allocators rather than make a direct call.
• The deeper hang-up is that allocators are still pricing Bitcoin as an investment, not as money. As Brian put it, Bitcoin's narrative is out of favor but its fundamentals are unchanged. AI has a great narrative right now, but the fundamentals are layered with competition, new entrants, and execution risk. Money is money.

Investor takeaway The institutional debate has moved from "is this real?" to "how do I hold it?" That is the last gate before broad allocation, and the operational answers are now mostly built.

Quote of the week "Having a zero weight is effectively saying you're short it. You're not even taking the market-weight neutral position." — Chris Kuiper, on why a zero Bitcoin allocation is now an active position

Custody is the moat. Central banks are next. Gradually, then suddenly.

• Chris's read on Fidelity from the inside: it is a risk-management company first and a financial-services company second. That orientation is what made owning the custody stack a priority years before it was obvious. The tacit knowledge inside a custody operation does not export and cannot be reproduced quickly.
• Michael's framing of the same point: the firms that survive cycle after cycle in Bitcoin are the ones that built conservatively, stuck to first principles, and didn't attach Bitcoin to something else. That set is small. It compounds.
• The advice Chris keeps returning to for allocators: own spot Bitcoin, unencumbered. Not wrapped, not yielded, not layered. The greatest opportunity remains the simplest one, and it is the hardest psychologically because financial services is built around complexity.
• The most underrated institutional move of the past year is the Czech National Bank opening a small Bitcoin position. People dismissed it as a token test account, but the governor laid out the rationale on stage at the Bitcoin conference, almost verbatim from Fidelity's own report. A central bank getting its hands dirty changes what other central banks consider possible.
• The game theory is the simple part. Once enough sovereigns and major firms hold Bitcoin, the rest face a choice between adopting or losing relative position. That is the "gradually, then suddenly" mechanism. The gradually phase is the part we are in right now.

Investor takeaway The institutional adopters who are early are not gambling on Bitcoin. They are taking the smaller, earlier version of a decision the rest of the market will eventually make at much worse prices.

🎙 The Last Trade · This week's episode Inside Fidelity's 'Get Off Zero' Bitcoin Report Chris Kuiper (VP of Research, Fidelity Digital Assets) on why zero is now a position you have to defend, the mean-variance math behind a 10% Bitcoin allocation, why bondholders are 30% underwater on a real basis, and the central-bank adoption already underway. ▶  YouTube Spotify Apple New episodes every Thursday. Subscribe so you don't miss the next one.