Bitcoin at tipping level, says Citi, as value rises
© Reuters. FILE PHOTO: Representations of the bitcoin virtual currency are placed on top of US dollar banknotes
NEW YORK / LONDON (Reuters) – rose nearly 7% on Monday as risk-weighted assets rebounded after last week’s bond out cooled. Citi said the most popular cryptocurrency was at a “tipping point” and could become the currency of choice for international trade.
With the recent adoption of Tesla (NASDAQ 🙂 Inc and Mastercard Inc (NYSE :), Bitcoin could mark the beginning of a “massive transformation” into the mainstream, the investment bank said.
Goldman Sachs (NYSE 🙂 has since restarted its cryptocurrency trading desk and will start trading Bitcoin futures and undeliverable futures for customers starting next week, a person familiar with the matter told Reuters.
“Those who draw parallels with the crypto bubble burst in 2017 may not have been responsible for the advancement of the technology since then,” said Paolo Ardoino, chief technology officer at Cryptocurrency Exchange Bitfinex.
Bitcoin, which hit a record high of $ 58,354 in February, could become the currency of choice for international trade in the future or face a “speculative implosion,” Citi said.
“There are a myriad of risks and obstacles that stand in the way of Bitcoin’s progress,” wrote Citi analysts. “However, weighing these potential hurdles against the odds leads to the conclusion that Bitcoin is at a tipping point.”
The world’s largest cryptocurrency rose 6.8% to $ 48,330 in the early afternoon. The smaller competing ether gained 6.8% to $ 1,517.
Bitcoin’s recent performance is due to the increased participation of institutional investors in recent years, as opposed to the heavy focus of retail investors over the past decade, Citi said.
If companies and individuals can access planned central bank digital cash and so-called stablecoins through digital wallets, Bitcoin would be “optimally positioned” to become the currency of choice for international trade because of its global reach, traceability and potential for fast payments, added Citi added.
Bitcoin, which was designed as a means of payment, is little used for trading in large economies as it is hindered by high volatility and relatively costly transactions. However, in some emerging markets such as Nigeria, it has gained in importance over the past year.
Such a dramatic shift to the de facto currency of world trade – a status currently held by the dollar – would depend on changes in the bitcoin market to allow for wider institutional involvement and closer supervision by financial regulators, Citi said .
However, shifts in the macroeconomic environment could also make the demand for Bitcoin less urgent, he added.
The recent surge in interest, sparked by the narrative that Bitcoin can serve as a hedge against inflation, has propelled it to a record high and a market cap of $ 1 trillion.
But it pulled more than $ 11,000 off those levels in the past week when it came to the sustainability of such high prices.
New York attorney general Letitia James warned investors on Monday against “extreme caution when investing in virtual currencies”.
Graphic: Bitcoin’s rise from March lows – https://fingfx.thomsonreuters.com/gfx/buzz/gjnpwzzqzvw/Pasted%20image%201614588130486.png