Bitcoin at a “Tipping Point” — Citi
The US financial services business Citi said Bitcoin was at a “tipping point” and could grow into a default currency for international trade. The number one cryptocurrency continues to win mainstream acceptance and support from major corporations like Tesla, Mastercard, BNY Mellon, and more.
According to Citi, the world’s largest cryptocurrency could be on the verge of mass adoption. The cryptocurrency has skyrocketed from $4,700 to exceed $57,000 in less than a year. Compared to the past several years when BTC rallies were mainly driven by retail investors, the latest frenzy comes as a result of increased involvement of institutional investors.
Citi sees BTC taking an optimal position to become the default international trade currency if companies and individuals obtain access to central bank digital money and stable coins via digital wallets. In that case, Bitcoin’s worldwide reach, traceability, and ability to allow quick payments would significantly rise, City added.
Bitcoin’s commercial use in large economies is still low due to its unpredictable and high volatility as well as expensive transactions. Citi’s analysts also said that Bitcoin’s potential to become the number one international trade currency largely depends on the amount of institutional investors’ involvement ahead and closer monitoring by financial regulators.
“There are a host of risks and obstacles that stand in the way of BTC progress. But weighing these potential hurdles against the opportunities leads to the conclusion that Bitcoin is at a tipping point,” the bank’s analysts said in a note.
Citi rival JP Morgan published a note last week to advise investors to allocate 1% of their portfolios to BTC and other cryptocurrencies in order to diversify portfolios.
“In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio,” said JP Morgan strategist Joyce Chang in a memo.
Citi said Bitcoin has a strong potential to become the preferred international trade currency and replace the US dollar. The cryptocurrency rose nearly 6% on Monday as investors moved toward riskier assets amid an improving global risk sentiment.
About the Author
Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.