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NEW YORK / LONDON: Bitcoin rose nearly 7% on Monday as risk assets rallied after last week’s bond slide cooled, with Citi saying the most popular cryptocurrency was at a “point turning point “and could become the currency of choice for international trade.
With the recent adoption of companies like Tesla Inc and Mastercard Inc, Bitcoin could be at the beginning of a “massive transformation” in the mainstream, the investment bank said.
Meanwhile, Goldman Sachs has restarted its cryptocurrency trading desk and will begin trading bitcoin futures and non-deliverable forwards for clients next week, a person familiar with the matter told Reuters.
“Those who draw parallels to the bursting of the cryptocurrency bubble in 2017 may not be explaining the advancement of technology since then,” said Paolo Ardoino, chief technology officer at cryptocurrency exchange Bitfinex.
Bitcoin, which hit a record $ 58,354 in February, could eventually become the currency of choice for international trading or face a “speculative implosion,” Citi said.
“There are a number of risks and obstacles that stand in the way of bitcoin’s progress,” Citi analysts wrote. “But weighing these potential hurdles against opportunities leads to the conclusion that bitcoin is at a tipping point.”
The world’s largest cryptocurrency was up 6.8% to $ 48,330 in afternoon trading. Smaller rival Ether rallied 6.8% to $ 1,517.
Bitcoin’s recent performance has come with increasing participation from institutional investors in recent years, in contrast to its strong focus on retail investors for most of the last decade, Citi said.
If businesses and individuals gain access through digital wallets to the central bank’s planned digital cash and so-called stablecoins, bitcoin’s global reach, traceability, and potential for quick payments would see it in an “optimal position” to become. in the currency of choice for international trade, Citi added.
Bitcoin, designed as a payment tool, is little used for trading in major economies, hampered by high volatility and relatively expensive transactions. However, it has gained ground in some emerging markets, such as Nigeria, over the past year.
Such a dramatic transformation to the de facto currency of world trade, a state that currently holds the dollar, would depend on changes in the bitcoin market to allow for broader institutional participation and closer oversight by financial regulators, he said. Citi.
Still, changes in the macroeconomic environment could also make demand for bitcoin less urgent, he added.
The recent spike in interest, sparked by a narrative that bitcoin can act as a hedge against inflation, has brought it to a record high and a market capitalization of $ 1 trillion.
But it has pulled more than $ 11,000 from those levels last week due to questions about the sustainability of such high prices.
New York Attorney General Letitia James warned investors Monday to use “extreme caution when investing in virtual currencies.”
Chart: Bitcoin rise from March lows: https://fingfx.thomsonreuters.com/gfx/buzz/gjnpwzzqzvw/Pastedper cent20imageper cent201614588130486.png
(Reporting by Thyagaraju Adinarayan and Tom Wilson; Additional reporting by Gertrude Chavez-Dreyfuss in New York and Karen Pierog in Chicago; Editing by Hugh Lawson and David Goodman)
