“Bitcoin may be in an ideal position to become the preferred currency in world trade,” says Citigroup, while other financial institutions describe it as a purely for-profit asset.
Its price quadrupled in 2020 and almost doubled in the first weeks of 2021, reaching $60.000. With the total market value approaching $1.1 trillion, the big banks began to present analyses for the largest cryptocurrency, from which, however, does not emerge a common view of the place that bitcoin should have in the markets, if it should have any.
The positions of Citigroup, BofA and Morgan Stanley
Citigroup was one of the first major banks to explain its point. In a 108-page analysis published last month, it said bitcoin “may be in an ideal position to become the preferred currency in world trade.” It raised concerns about capital gains, insurance and security as well as the environmental footprint of cryptocurrencies, concluding that “developments in the near future are likely to be decisive as the currency is on the verge of acceptance by the established ».
Then came Bank of America and Morgan Stanley Wealth Management. “The overall returns of bitcoin this year are already among the highest in its short history,” said BofA’s chief analyst. However, he stressed his serious concerns about the environmental footprint of cryptocurrencies, noting that the annual energy consumption of bitcoin is similar to that of the Netherlands due to the energy-intensive process of “mining” new currencies. BofA analysts also noted that bitcoin is not a suitable means of covering inflation.
Morgan Stanley Wealth Management investment manager, Lisa Shalett, said last week in a report that cryptocurrencies are on the verge of becoming an investment category. She said that the evolving regulatory framework, improved liquidity conditions and growing interest from institutional investors have created the conditions for cryptocurrencies to be included in institutional investors’ portfolios, as was the case with gold 45 years ago. “Our recommendation is to educate investors and consider how and when to expose themselves to this explosive asset class,” Shalett said.
Different view from Commerzbank and Armundi
The German Commerzbank is of a different opinion, considering that bitcoin is not worth analysing, characterising it as a purely speculative asset.
French portfolio management company Amundi released its first cryptocurrency analysis on Monday, with the deputy chief investment officer warning of a possible violent price correction following the rules set by major regulators.
Fed Chairman Jerome Powell said on Monday that cryptocurrencies are more suitable for speculation than for payments.