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Citibank suggest Bitcoin is at a tipping point

Photo of: Nathan VDH
by Nathan VDH

In a report, the Citi Bank estimates that Bitcoin is now at a tipping point. Its adoption is becoming widespread. However, its volatility does not rule out a “speculative implosion”.

Is Bitcoin now at a crossroads? This is what a report by the investment bank Citi suggests. Two main scenarios would thus be offered to the first of the cryptocurrencies. Either its widespread adoption or speculative implosion.

This is pleasing. Bitcoin’s assets first. For Citi analysts, the BTC is the “North Star” in the world of cryptocurrencies. Its dominance is indeed evident today. At least in terms of valuation.

“Bitcoin is becoming the de facto North Star of digital space, its trajectory being seen as a compass for the evolution of the wider ecosystem,” the report says.

This is not the only quality of Bitcoin at the moment. Because of the recent adoption of players like Tesla, Bitcoin could therefore be at the beginning of a massive transformation.

And this would lead to its widespread use worldwide. The trend is indeed different from that of 2017 thanks to the increasing participation of institutional investors. In short, Bitcoin has changed its status.

But to what extent? The report suggests that crypto could become the reference currency for future international trade. This scenario may seem very unlikely at the moment.

For the authors of the report, cryptocurrencies have two necessary characteristics: a borderless design, and an absence of exposure to foreign currencies. And these two features could therefore favour this phenomenon.

However, Bitcoin is not without risk and several obstacles remain in its path. Cryptocurrencies are not without rivals, for example. And some tokens could therefore take its crown from the BTC. This is the analysis of the boss of the FD7 Ventures fund.

In fact, growth is stronger on the side of the Altcoins. In 2020, the market capitalization of Bitcoin increased by 2.70 times. For other cryptocurrencies, this increase was 3.75 times over the same period.

In 2019, Bitcoin accounted for 69% of the value of the crypto market. One year later, this share dropped to 62%. But competition is not the only risk at its advent. Changes in the macro-economic environment could also be detrimental to it.

Institutionals would essentially opt for Bitcoin to protect themselves against inflation and currency devaluation. However, the major economies would show signs of recovery. Clearly, will Bitcoin withstand a global economic recovery?

According to Citi, “There are a host of risks and obstacles that stand in the way of Bitcoin’s progress. As a result, obstacles and opportunities suggest that Bitcoin is at a tipping point,”.