Bitcoin (BTCUSD)

[Investors3]

Bitcoin Poised For ‘Massive Transformation’ Into The Mainstream, Citi SaysRobert Hart

TOPLINE Bitcoin could be at the start of a “massive transformation” into the mainstream and on the path to become “the currency of choice for international trade," according to leading investment bank Citi, which noted the cryptocurrency’s meteoric rise in value in recent years and a growing interest from institutional investors as potentially setting the stage for widespread success.

KEY FACTS

* In a report published Monday, Citi analysts said the world’s most
popular cryptocurrency was at a “tipping point” between widespread
adoption or a “speculative implosion.”

* Bitcoin’s growing use as a payment tool, the increasing availability
of digital wallets, and institutional interest from the likes of
Tesla and Mastercard have all helped buoy confidence in the
cryptocurrency and could see it become the leading medium for
international trade in the future, Citi said.

* The analysts described Bitcoin as the “North Star” of the blockchain
ecosystem, with its underlying technology launching an entirely new
domain of the digital economy around it.

* However, there are a number of risks and obstacles that could see
the Bitcoin bubble burst, the analysts warned, and widespread
changes to the market would be required for Bitcoin to be adopted
more widely.

* Dampened institutional investment in the post-Covid-19 world would
remove a key pillar of support for Bitcoin, Citi said, and
anticipated regulation and oversight—which runs counter to the anti-
establishment ideology underpinning the cryptocurrency—could also
“cause many of the most innovative developers and entrepreneurs to
exit the ecosystem,” the analysts wrote.

KEY BACKGROUND

Bitcoin is one of the most volatile asset classes around. It has a bumpy and storied history since it was outlined in a paper in 2009, moving from practically worthless to an all time high of over $58,000 a coin in February 2021 (the price has since dropped to around $47,000) with several significant troughs and peaks in between. At its highest, Bitcoin’s market capitalization exceeded $1 trillion. As with the bulk of its history, Bitcoin is still driven by retail investors, who billionaire philanthropist Bill Gates warned not to get drawn in by the “mania” and enthusiasm of Elon Musk who has money to spare should things go wrong.

CRUCIAL QUOTE

"I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” Tesla CEO Elon Musk said on Clubhouse earlier this year.

TANGENT

In October, PayPal finally welcomed cryptocurrencies to its platform, believed by many to be a precursor to it moving into the mainstream. PayPal will support four different cryptocurrencies—bitcoin, ethereum, litecoin and bitcoin cash—and will expand the service to Venmo in 2021.

FURTHER READING
Bitcoin. At the Tipping Point (Citi)

Bitcoin rises 6% as risk assets rally; Citi says at a "tipping point" (Reuters)

Bitcoin’s Long-Term Value Doubted Due to ESG, Tighter Rules (Bloomberg)

https://www.forbes.com/sites/roberthart/2021/03/01/bitcoin-poised-for-massive-transformation-into-the-mainstream-citi-says/?sh=18a49b966252