Francisco Blanch, an analyst at Bank of America, has called Bitcoin exceptionally volatile, impractical, and as an environmentally disastrous asset, useless as a store of wealth. Or, as a hedge against inflation during a report titled: “The Dirty Little Secrets of Bitcoin” in which, he addressed not only this, but several other topics. This was reported by a financial publication The Street.
Blanch also claimed that cryptocurrency is an impractical payment method, as it can only perform 1,400 transactions per hour. Compared to the 236 million transactions Visa processes.
The report titled ‘The Dirty Little Secrets of Bitcoin’, which echoes the tough stance taken against cryptocurrencies by traditional financial institutions in years past, stands in contrast to other big banks such as Goldman Sachs and JPMorgan. Who have since embraced Bitcoin as an asset.
Likewise, Bank of America believes that there is only one reason to own Bitcoin: speculation about its rising price.
“BTC has been correlated with risk assets, is not linked to inflation, and remains exceptionally volatile, making it impractical as a store of wealth or payment mechanism,” said Francisco Blanch, commodity and derivatives strategist at the Bank.
Bitcoin is volatile and easily manipulated
The US bank analyst continued to develop his idea in “The Dirty Little Secrets of Bitcoin ». Arguing that the increase in the price of Bitcoin is mainly motivated by supply and demand and not by its limited supply.
Blanch explained that because the supply is fixed, fluctuating demand is the only thing that drives the price. He pointed out in this sense that the cryptocurrency was highly manipulable, because a small inflow of money could easily motivate its price growth.
«Bitcoin returns are sensitive to increasing demand for dollars. A net entry into Bitcoin of $ 93 million can result in a price increase of 1%». The strategist added that to achieve the same result with gold, more than USD 1.86 billion would be required.
The portfolio’s main argument for holding Bitcoin is not diversification, stable returns, or protection against inflation. But a mere appreciation of the price, a factor that depends on the demand for Bitcoin exceeding the supply.
For Bank of America, the reason for this is likely due to the concentration of Bitcoin. Blanch made an argument contrary to that made by Bitcoin enthusiasts regarding its decentralization. In addition to these aspects, the report also detailed some important points about the main cryptocurrency.
BTC is too important to ignore, says Deutsche Bank report
Now, in contrast to «The dirty little secrets of Bitcoin», A new report from Deutsche Bank assures that, Bitcoin is now too important to ignore. Given its market capitalization of USD 1 trillion.
The report released on Wednesday states that the price of Bitcoin could continue to climb as long as it continues to attract entry from asset managers and companies. However, the cryptocurrency is expected to remain volatile due to limited tradability.
Deutsche Bank estimates that less than 30% of transactional activity in Bitcoin is related to payments. In 2020, for example, 28 million BTC changed hands, which is equivalent to 150% of the total bitcoins in circulation. Meanwhile, 40 billion Apple shares were traded, equivalent to 270% of the total.
Also, the average amount of BTC exchanged daily in US dollars is equivalent to only 0.05% of the yen and 0.06% of the British pounds that make it.
Therefore, Bitcoin must transform potential into results, in the same way that Tesla has done, according to Deutsche.
«Bitcoin’s current valuation has a broader shift towards cross-border digital currencies, so you need to prove your value as a means of payment to live up to your reputation.». The Deutsche Bank document concludes.
Bitcoin is better than Gold when analyzed, a fund manager tells the media
Bitcoin (BTC) is superior to gold if investors take the time to study it, says hedge fund manager Anthony Scaramucci.
In an interview with CNBC on March 18, Scaramucci, CEO of SkyBridge Capital, reinforced his belief in Bitcoin for the general public..
With the rise of Bitcoin in 2021, questions continue to arise as to whether the gains come at the expense of gold. That it has failed to capitalize on the risks associated with printing money from the global government.
In comparing the two assets, Scaramucci left little doubt about his preference, arguing that gold may have been the choice for a store of value for 4,000 years, but nothing is forever.
«The world is changing, that’s the reality, Joe, the world is changing“He told host Joe Kernen.
The comments go against staunch supporters of gold. Especially Peter Schiff, who remains convinced that Bitcoin will fail. Leaving gold as the only option to escape the dangers of central bank economic policy.
What do you think of the ‘Dirty Little Secrets of Bitcoin’ report? Let me know in the comment box.