Maybe I am a little late with this news but did you read about this Bank of America report? In this article we will try to cover some of the most interesting points made in this report. In my opinion this report indicates very bullish signs for the future of crypto and will help us understand how the banks are viewing crypto currencies. With this being said, please keep in mind that this article is no financial advice.
About this Report & Overview
With this report one of the largest banks in America shows indication of crypto adoption. Unfortunately, this was not always the case in the past. One of Bank of America’s senior analysts described the crypto space as “the mother of all bubbles” at some point. Another report by this bank described Bitcoin as too volatile, too slow, and as too energy inefficient.
However, this regard on things seems to have changed in April when JP Morgan introduced a Bitcoin fund for its high-end investors. With this happening it was only a matter of time that Bank of America tips their toes into the crypto world. This happened soon with Bank of America joining several crypto projects, with one of them being the exchange FTX. Furthermore, they created a crypto research team which probably brought us this particular report we will talk about now. The report focuses on the following four topics: the market cap of digital asset, tokenization, dApps & NFTs and last but not least Crypto Regulation.
Analysis and General Information
The analysis of this report starts of with the acknowledgment that BTC is volatile but its volatility has gone down with a broader adoption. As for the rising prices of Bitcoin the authors identify regulatory clarity as the biggest driver. They continue by saying that only institutions have the kind of power and amount of money to push Bitcoin to a potential trillion dollar market cap. Furthermore, the authors are hinting further reports on the largest Altcoins like Ethereum. They describe it as the digital oil and I personally can not wait to see this report getting released. After presenting some major numbers about the higher getting money amounts which are invested in DeFi and NFTs the authors take a quick look at the CBDC situation. It is mentioned that other than Chinas digital currency (which is supposed to be fully operative in 2022) the big nations are lacking behind with the development of these digital currencies.
Trading Stats & Valuing BTC
Continuing with this report the authors go into the topic of institutional crypto trading. A very interesting statistic here is that by the end of 2020 only 1% of Coinbase users were institutional ones. But held 50% of platform assets and contributed to 64% of platform trading volume. Keep in mind that the number of institutional investors has likely grown over the past year. This only means that the share of institutional investors will continue rising and with that the crypto share of the whole financial sector.
After that, the report tries to give an outline about the value of Bitcoin. It says that bitcoins price is depended on the supply and demand, like the price of any asset would do. Demand in this context is very closely linked with adoption. Here, the main drivers for adoption are described as the rising institutional investment, the decreasing barriers to entry the crypto space and the growing acceptance of BTC as a store of value. This brings up the question of whether bitcoin and the rest of the crypto space is in a bubble, like I mentioned before. The authors try to address this possibility by following graph. It looks like most of the institutional investors are changing their mind. But if we compare the price of Bitcoin in May to now, there is not a big difference. To add to this: In recent times this analysis could be true for any kind of asset, because thanks to the government money printing every asset class is in a undefined state.
Altcoins and Stablecoins
This reports also covers Altcoins which is also very interesting to say the least. After giving a long list of Altcoins and briefly describing them the authors continue talking about Stablecoins. Before we continue talking about them, I want to mention that people should watch this list of Altcoins very carefully over the next few months. The main question here is: Are these the coins that are going to pump in recent times because of bigger adoption or a those the coins that the government will take a closer look at to provide harsher regulations? Going back to Stablecoins. The report says that stablecoins could be easily described as securities just because they are mainly backed by government bonds. This makes stablecoins derivatives of these bonds which would make them also securities.
Conclusion
Seeing this news makes me feel good about the crypto future. Not only does it show that big banks are slowly getting interested in the crypto space, it also shows how much potential there still is. In my opinion the future stands and falls with the regulations that will be put in place. If they will be too harsh we could see another dry period in the crypto space. But this is not set in stone either. What do you think about this report? Are we in for another bullish 2022? I am also always glad to receive any feedback so don’t hesitate to give me any advice!
Published by ga38jem on
Publish0x|LeoFinance|Steemit|read.cash
On 20th October 2021
Sources:
https://www.reuters.com/business/bank-america-launches-research-coverage-digital-assets-2021-10-04/