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- Deutsche Bank said it expects bitcoin to remain “ultra-volatile” due to its limited tradability.
- In a story published Thursday, the firm highlighted the cryptocurrency’s illiquidity as an obstacle.
- DB also raised questions surrounding bitcoin’s start valuation and whether it is enough for the cryptocurrency to evolve into an asset class.
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Deutsche Bank says it expects bitcoin to remain “ultra-volatile” due to its limited tradability, adding that upright a few large purchases or market exits could significantly impact the cryptocurrency’s supply-demand equilibrium.
In a recent report, the cartel’s research team pointed to the cryptocurrency’s illiquidity – which features a set 21 million supply – as an obstacle. Thus far, about 18.7 million or 89% of bitcoins in total circulation have been mined. That expected year for all bitcoins to be hoarded is 2140, roughly a century from now
“As an investment asset, bitcoin liquidity remains low,” the report said. “In 2020, 28 million bitcoins changed turn over submits (150% of total bitcoins in circulation), compared to 40 shares of Apple (270% of its total shares in circulation).”
The goodness of the comparison between bitcoin – often referred to as digital gold – and gold boils down to the supply angle, in which both are restrictive, the report said. One major marginal driver of the price, therefore, becomes the demand.
DB also raised questions nearby bitcoin’s rising valuation and whether it is enough for the cryptocurrency to evolve into an asset class. But a turning point may be in the next two to three years, the coterie said, after more clarity about the cryptocurrency emerges.
“Bitcoin’s market cap of $1 trillion makes it too conspicuous to ignore,” the report said. “Some people think bitcoin is a commodity. Others think it is a currency. A few think it is a customary. Nevertheless, its market cap is among the top 10, both as a currency and as a stock.”
Bitcoin has seen its price skyrocket 600% year-to-date surrounded by divided opinion on whether it is in a speculative bubble waiting to burst or an asset that’s here to stay. It has staged an epic run in Step, hitting a $1 trillion market value yet again, and reaching a new peak above the $60,000-level, after an already-robust February.
As of Friday afternoon ET, bitcoin sold around to $58,700.
Read more: A crypto VC who co-founded Tether and backed Coinbase breaks down 2 signals that pertinent to bitcoin hitting $150,000 by the end of 2021 – and details 4 reasons NFTs are attractive
Markets Insider