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Deutsche Bank “Bitcoin too significant to ignore”

Photo of: Nathan VDH
by Nathan VDH

For Deutsche Bank, Bitcoin is here to stay and its $1 trillion capitalization makes it “too significant an asset to ignore.” But the debate over BTC is no longer there, the bank judges.

In 2017, billionaire and investor Howard Marks did not hide his skepticism about Bitcoin. He thus called the cryptocurrency a “baseless fad”. The fad has a life of its own, however, and so Mark has revised his position.

For Deutsche Bank, there is no doubt either. Cryptocurrencies are here to stay. Besides, with a market capitalization of $1 trillion, Bitcoin is now “too significant to be ignored. “

But the fact that the asset cannot be ignored does not mean that its value is sustainable or that it is a good investment product. For the bank’s analysts, Bitcoin suffers from several shortcomings.

So certainly, its rise is interesting. Also, as long as “asset managers and companies continue to enter the market, Bitcoin prices could continue to rise. “However, the big players have considerable power in the market.

This is also Bank Of America’s position. On the other hand, the rise is good, but it is not a sufficient argument for Deutsche Bank. That’s not the issue. “The real debate is whether rising valuations are reason enough for Bitcoin to become an asset class, or whether its lack of liquidity is an obstacle,” she considers.

The bank is also skeptical about the potential of Bitcoin and other cryptocurrencies in the payments sector. PayPal, Visa and Mastercard, giants in the field, are counting on this democratization.

Central banks and government could be an obstacle, however. The German bank is counting on a regulation of crypto-assets as early as the end of 2021 or the beginning of 2022. CBDC projects are another response from states.

“In the medium to long term, due to very strong network effects, there will probably be little room for the use of cryptocurrencies as a widespread means of payment,” Deutsche Bank believes.

And in the longer term? “Bitcoin, like Tesla, will need to turn its potential into results to maintain its value proposition. “Thus, as an investment asset, Bitcoin displays low liquidity. It is also expected to remain “ultra-volatile.

As for its future, it could be in the next few years. “The next two to three years should be a turning point for bitcoin; a consensus on its future may emerge as people follow the evolution of digital currencies,” the bank analyzes.